Terra Ecosystem Outlines Redemption Strategy

Terra’s co-founder reveals a plan for rebirth that involves dumping the $UST and forking the chain under a new coin.

Do Kwon, Terra’s co-founder, reveals a redemptive plan to restore an ailing ecosystem by forking the Terra blockchain in a forum post. After the $UST de-pegged, the native coin that drives the Terra blockchain, $LUNA, dropped practically to zero.

Do Kwon admits that faith in the $UST has been destroyed because the ‘decentralized money’ failed and that it can no longer perform its function. He said:

“While a decentralized economy requires decentralized money, UST has lost too much trust with its users to serve in that capacity.”

The Terra ecosystem has abandoned $UST but intends to rebuild the chain in order to sustain the community and the development environment. The proposal states that validators will reset network ownership to 1 billion tokens.

Terra will be a community-owned company

The revival plan’s principal goal is to guarantee that the impacted parties are adequately compensated. When the $UST was originally de-pegged this month, 400 million of the proposed split tokens were issued to prior $LUNA holders. Terraform Labs will not be included in this release.

Another 400 million tokens will be distributed to UST holders in exchange for carrying Terra’s debt. The remaining 200 million tokens will be distributed evenly among $LUNA holders prior to the chain’s suspension and to the community pool.

Decentralized Money

The $LUNA value proposition is based on the goal of bringing ‘decentralized money’ to the crypto ecosystem. This approach has many adherents since it adheres to the principle of decentralization.

Do Kwon recognizes the failure of $UST in his proposal and leaves the door open for the community to revisit this idea in the future. The immediate worry, however, is the preservation of the layer-1 protocol.

The fall of the $UST, a $18 billion asset by market value, has stunned many and served as a moment of reflection for many. However, it did not eliminate the necessity for a decentralized stablecoin.

About Terra

Terra is a blockchain protocol and payment platform used for algorithmic stablecoins. The project was created in 2018 by Terraform Labs, a startup co-founded by Do Kwon and Daniel Shin. It is most known for its Terra stablecoin and the associated Luna reserve asset cryptocurrency.