Terra should protect small farmers, not whales

Ethereum co-founder Vitalik Buterin believes the troubled Terra (LUNA) project should prioritize small hodlers as part of any proposed reimbursement scheme.

As widely reported, the Terra ecosystem suffered a death spiral around May 9, causing LUNA to plunge 100% and the Terra USD (UST) stablecoin to lose its peg to the US dollar ($0.16 at the time of writing).

With LUNA and UST investors suffering significant losses, the community is now looking for ways to rebuild the ecosystem and potentially provide relief to the many who have suffered financially.

One such community proposal – assuming the UST dollar peg eventually stabilizes – is first compensate All initial deposits (not yields) for small holders of UST to “greatly improve overall morale and sentiment” while figuring out how to classify creditors and large investors later. Estimated spending is between $1 billion and $1.5 billion.

Buterin expressed support for the idea via Twitter on May 15, noting that the focus should be on smaller investors who need capital, before further advising whale enthusiasts to deal with losses:

“Provides coordinated sympathy and relief to ordinary UST smallholders who are being held back by an influencer, personal responsibility and [sorry for your loss] SFYL for the rich. “

Although Co-founder of Ethereum He did not explicitly call for regulation, but he did highlight potential insurance such as financial deposit insurance that could be useful in these situations.

“An interesting unrelated law is the Singapore employment law. Tighter regulation for low-income workers, a more self-reliant approach to the wealthy. IMO something like this is a good mix of formulas,” he said.

At this stage, it’s unclear whether the project will be able to rebuild, or if it’s designed to recover temporarily to make up for investors’ losses, though that may be difficult. It’s also worth noting that the proposal related to Buterin’s comment, which was updated within a week, is now weighing a cap of $50,000 per wallet to be paid to all users.

related: Buterin donates $4 million to UNSW for pandemic testing kit

Another idea circulating online is to develop a hard fork upgrade for the Terra blockchain dubbed “TERRA 2,” while also launching a liquidity pool to re-peg UST.

Founder of Binance and CEO Changpeng Zhao However, the weekend slammed the concept, stating on Twitter that “forks don’t add any value to new forks. That’s wishful thinking.”

Luna Foundation guards before LUNA and UST crash Holds approximately $2.7 billion The value of Bitcoin (BTC), and when referring to the idea of ​​a pool to rebuild UST, CZ also questioned “Where is all the BTC that should be used as a reserve?”

Terraform Labs founder Do Kwon (resurfaced online late last week) also proposed a Refactoring of the Terra blockchain Reset “Network Ownership” and distribute 1 billion LUNA tokens to the community.

However, Kwon’s proposed “Terra Ecosystem Revival Plan” has met with backlash from popular figures in the crypto community, such as Dogecoin co-founder Billy Markus, who has Call Relinquish authority to leave the department, stating:

“If they want to repay the victims of their stupid failed agreements, instead of using new funds from new victims, they should repay them using the funds they already have from investors.”