What is “v21” and what does it mean for the Luna Classic Community
update: After discussion with Terraform Labs, the final version will be “v22”, not “v21” as originally intended.
On May 8th 2022, the Terra stablecoin, UST, depegged from its one-dollar mark and crashed over the period of several days. Trillions of LUNA were minted and billions worth of BTC were sold to prevent the collapse of UST, but the framework could not support the massive sell-off and the Terra ecosystem suffered a devastating death spiral.
When the price of LUNA cratered, the blockchain was at risk of multiple types of attack, including governance attacks and byzantine fault tolerant (take over) attacks. Terraform Labs (TFL), the developers of the Terra blockchain, issued a code patch to the validators to prevent further damage including disabling delegation, staking, and the creation of new validators. The internal swapping mechanism between LUNA and UST was disabled, and the cross chain communication bridges were severed. The Terra blockchain was crippled to the point where it literally cannot survive in its current state, i.e. Terra is a Proof-of-Stake blockchain and staking has been disabled.
In the wake of this disaster, most of the old community left to create a new blockchain, and LUNA was renamed LUNC (Luna Classic). The validators (nodes of the blockchain that sign off on transactions) have stayed, but are also slowly eroding from the 130 active validators down to 84. Since no new validators are allowed by the security patch, the life support of the chain can only monotonically expire. New investors and opportunity seekers have poured into the ecosystem, many without a complete understanding of the state of affairs. Additionally, they have been locked out of the decentralized governance structure since they cannot stake, and thus cannot vote on new proposals. If nothing is done, they will suffer the same loss as the previous generation.
While the situation is dire, there is a glimmer of hope. A group of community volunteers have self-organized into multiple factions to help resurrect the blockchain. Some of these factions focus on “burning” LUNC as a deflationary mechanism for the cryptocurrency, and others are working on the blockchain technology itself. Our group of volunteers, Terra Rebels, is a community focused on the technology. Over the past several months, we have been working diligently to code changes to the blockchain in accordance to passed governance. We have authored a new version of the software called “v21”. The most important features of v21 are that it re-enables delegation and staking. New investors would be able to delegate their tokens to the existing validator set, earn delegation rewards, and participate in the voting process. This means they get a voice in how the blockchain can evolve from its comatose state. After 60 days, new validators will be enabled. This will unlock the active set to anyone in the community who wishes to support the validation of on-chain transactions. The blocks heights have been set in v21 where the first changes should happen around August 26th. The exact block heights are shown as follows.
Furthermore, to support the deflationary effort of the Luna Classic community, we have coded a variable tax mechanism that adds the specified tax to the required gas fees to perform transactions on chain. These taxes are collected and burned after every block. The taxes are coded but lie dormant in the v21 upgrade. Enablement of taxes requires the community to propose and vote upon the exact parameters of the tax rate as described in our technical white paper, linked below. One note is that the tax creates changes in how all parties must interact with the blockchain. Thus, all of the implications will need to be discussed (and/or fixed) before such a change is put into place. These will be outlined in the agora classic forums (https://classic-agora.terra.money/) after v21 is functioning on the Luna Classic blockchain.
While we have proposed these “fixes” to the blockchain, let us not be blind to the risks and challenges that still lie ahead. If the UST depeg has taught us anything, we should continue being vigilant in our research and understanding of what has gone wrong and what could go wrong. In particular, if UST were purposefully attacked, security measures should be at the forefront of the community development going forward. John Galt, https://twitter.com/lurkaroundfind , outlines a possible attack vector where the newly minted LUNC during the depeg could be utilized against the blockchain. These concerns should not be dismissed, but discussed and addressed if needed. If the community continues to develop with input from all sides, we can rebuild Terra to something stronger than it has ever been.
So what is “v21”? I believe v21 represents a glimmer of hope to the Terra ecosystem and to the cryptocurrency community as a whole. We, the community, can self-organize, protect and educate each other, restore what is broken, and ultimately become stronger from it. Indeed, if v21 is successful, what is dead may never die.
