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) to keep in parity with the US Dollar. But inaction to UST’s loss in its peg and investors tried cashing out a masse, which affected the downward fall of Luna.
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 last few days on the phone calling Terra community members – builders, community members, employees, friends, and family, that have been devastated by UST depegging. I am heartbroken about the pain my invention has brought on all of you.”
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 of DO Kwon: ” Neither I nor any institution that I am affiliated with profited in any way from this incident. I sold no luna nor ust during this crisis.” he poured his heartfelt emotions into this.
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 about the report of everything that transpired the last weeks is in progress and will be published as soon as possible. Further, pouring 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 Friday post on Terra’s research forum, Kwon said, The Terra community must reconstitute the chain to preserve the community and the 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 pro-rata 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%, as fees will no longer be enough to pay for security without the swap fees.
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.”
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