Big players in the crypto industry do not seem supportive of the latest Do Kwon’s proposal of how to help the collapsed Terra (LUNA) ecosystem.
Last Friday, Terraform Labs co-founder Do Kwon put forward a ‘revival plan’ suggesting that the network hard fork and reset ownership to 1 billion tokens. A the time of writing, LUNA has a circulating supply of more than 6.5tn. In comparison, there were only 340m tokens prior to the depegging.
Binance CEO Changpeng Zhao (CZ) has slammed the proposal, arguing that “forking does not give the new fork any value. That’s wishful thinking.”
“One cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges),” the CEO added, suggesting that the idea of providing holders with a new version of LUNA based on a snapshot of their holdings before the depegging of terraUSD (UST) stablecoin won’t succeed.
Terra’s algorithmic stablecoin UST started distancing from its dollar peg on May 9 after a wave of selloff hit the market. Since LUNA sales were supposed to help UST maintain parity with the US dollar, the depegging resulted in a death spiral where LUNA inflation increased unprecedentedly and sent the price of LUNA tokens to almost zero.
Do Kwon suggested resetting network ownership to 1 billion tokens that would be distributed among LUNA and UST holders as well as a community pool to fund future development.
“The Terra community must reconstitute the chain to preserve the community and the developer ecosystem,” he said in a Friday post on Terra’s research forum.
However, Binance’s CEO said that forking would not help.
“Reducing supply should be done via burn, not fork at an old date, and abandon everyone who tried to rescue the coin,” he said.
Do they really think they can fork BTC at the snapshot on Nov 18, 2021, and the new fork will have the new BTC at $68,000 (the price on that day)?
— CZ 🔶 Binance (@cz_binance) May 14, 2022
Meanwhile, Ethereum (ETH) co-founder Vitalik Buterin has endorsed another community proposal that suggests prioritizing the reimbursement of small UST holders to “greatly improve general morale and sentiment” with an estimated payout of between USD 1bn to USD 1.5bn.
“Strongly support this,” Buterin said. “Coordinated sympathy and relief for the average UST smallholder who got told something dumb about “20% interest rates on the US dollar” by an influencer, personal responsibility and SFYL [sorry for your loss] for the wealthy.”
The obvious precedent for what? The banks fund FDIC insurance. If a crypto wanted to "self-insure" by setting aside a certain percentage of every transaction as insurance and then finding a way to turn that into another currency… maybe? How are you going to insure wallets?
— Chris Surprenant (@CWSurprenant) May 16, 2022
This past weekend, Buterin has also slammed the whole idea of algorithmic stablecoins, claiming that it has become “a propaganda term serving to legitimize uncollateralized [stablecoins] by putting them in the same bucket as collateralized [stablecoins] like DAI/RAI.”
Agree hard on this, with the one quibble that "algostable" has become a propaganda term serving to legitimize uncollateralized stables by putting them in the same bucket as collateralized stables like DAI/RAI, and we need to really emphasize that the two are very different.
— vitalik.eth (@VitalikButerin) May 14, 2022
For now, LUNA bottomed at USD 0.000000999967 on March 13 and is now up 23,673%, trading at USD 0.00024079, per CoinGecko data. The price is down 18% in a day and almost 100% in a week.
Source: Cryptonews
