From the last few weeks, and just three days ago, Terra Luna’s supply was just 340,000 according to Terra analytics. And the UST lost its peg from the dollar on Monday, and that is when the Luna started falling downward in reference to the related token which was supposed to prop up UST’s value.
The sale of Luna was supposed to help the algorithmic stablecoin TerraUSD (UST) maintain parity with the US dollar. But inaction in the face of UST’s loss in its peg and investors tried to cash in a sledgehammer, which affected Luna’s downfall.
The CEO and Co-founder of Terraform Labs have broken his silence on social media by making a trio of tweets this Friday. Regarding the collapse of Terra’s LUNA token and UST, an associated stablecoin.
Stating “I’ve spent the past few days on the phone calling members of the Terra community – builders, community members, employees, friends and family, who have been devastated by the UST undocking. I heart broken by the pain my invention has caused you all.
Continuing to this he again tweeted on May 14: “I still believe that decentralized economics deserve decentralized money – but it is clear that $UST in its current form will not be that money.”
Adding to the above two statements by DO Kwon: “Neither I nor any institution I am affiliated with has benefited in any way from this incident. I have not sold luna or ust during this crisis. poured his heartfelt emotions into it.
Terra Ecosystem Revival Plan
Kwon further floated a proposal in a Terra discussion forum to restart essentially the network with worth 1 billion tokens by distributing them to the affected holders and users. In reference to the recent reports made on UST, Terra’s native LUNA asset experienced steep losses to the ones that were exposed to the market. This disorder led to blockchain stoppages ultimately and market trading halted as the circulating supply of LUNA skyrocketed.
The Terra devs tweeted that the report of everything that happened over the past few weeks is ongoing and will be released as soon as possible. Additionally, dropping an emotional statement, he said that
“These are tremendously difficult times for everyone affected. The feelings are still raw. please be safe, The strength of #LUNAtics has been amazing. more to come.”
Token redistribution plan
In a post on the Terra Research forum on Friday, Kwon said, “The Terra community needs to rebuild the chain to preserve the community and developer ecosystem.
Validators should reset the network ownership to 1B tokens, distributed among:
400M (40%) to Luna holders before the de-pegging event (last $1 tick before the depeg on Binance should be reasonable).
400M (40%) to UST holders on a pro rata basis at the time of the new network upgrade.
100M (10%) to Luna holders at the final moment of the chain halt – last-minute marginal luna buyers should be compensated for their role in attempting to provide stability for the network
100M (10%) to the community pool to fund future development.
All Luna besides the third tranche should be staked at the network genesis state.
The network should incentivize its security with a reasonable inflation rate, say 7%, because the fee will no longer be enough to pay for the security without the swap fee.
Although there’s no way to fully restore the blockchain’s value, Kwon said the redistribution plan has to compensate the network’s debt holders and “loyal community members and builders.”