Do Kwon Proposes A New Plan for Terra Ecosystem, Abandon UST
The Terra co-founder has given up on restoring UST’s peg, and proposes to hard fork Terra to start fresh.
Do Kwon, Co-Founded of Terra, has proposed a new revival plan for the Terra community, which would involve abandoning the UST stablecoin completely. He suggests that validators reset network ownership under a new token by forking the chain, and distributing it to fairly compensate all damaged parties.
UST Has Failed
Kwon wrote in a forum post that Terra’s governance token LUNA has been diluted to such a degree that its joint ecosystem with TerraUSD (UST) can no longer be rebuilt – even if UST’s peg could somehow restored.
UST, at its peak, was the third-largest stablecoin pegged to the US dollar, while LUNA was a governance token that provided support for UST’s peg. Both coin have collapsed by 84% and 99% this week, respectively.
According to Kwon, the collapse has completely destroyed trust in UST that it can no longer serve as the “decentralized money” it was meant for. He wrote:
“While UST has been the central narrative of Terra’s growth story over the last year, the Terra ecosystem and its community is what is worth preserving.”
Reset The Network Ownership
The Co-Founder therefore proposes forking the chain, and resetting network ownership to just 1 billion tokens, down from over 6 trillion LUNA tokens currently in circulation.
400 million of the Terra fork’s tokens will be distributed among prior LUNA holders at the time that UST had first de-pegged this month. This will not include Terraform Labs, however, as Kwon intends for the new chain to be “community-owned”.
Another 400 million tokens will be shared with UST holders at the time of the upgrade, to make them whole for holding Terra’s debt.
The next 100 million will go to LUNA’s last holders before the Terra chain was halted, with the final 10% dedicated to the community pool.
Kwon maintains that the Terra community will find another way to implement “decentralized money” to replace UST in the future.
The new plan outlined is quite different from Kwon’s original UST recovery plan.
