Terraform Labs co-founder Do Kwon proposed a Terra hard fork creating a new network and an airdrop. He called it "a chance to resurrect the project from the ashes".
2/ It has been inspiring to partake in the dynamic discourse regarding the best next steps for Terra. Taking feedback from the community and thoughtful proposals, I would like to suggest the following for the path forward.https://t.co/E13VI8bkLh
A thread on our reasoning:
— Do Kwon 🌕 (@stablekwon) May 16, 2022
The new network is expected to keep the Terra name with the LUNA token. The original blockchain will become Terra Classic with Luna Classic (LUNC) accordingly.
The project will continue development without a new algorithmic stablecoin. Kwon called the UST peg to the dollar a "moment of the hack" DAO Terra.
The total LUNA supply will be 1 billion tokens, with a staking reward target (inflation) of 7%.
For token distribution two snapshots will be taken — on May 7 ("Before the attack") and on May 17 ("Launch"). Shares for airdrop participants will be:
- 35% — community pool, controlled through staking;
- 5% — developers;
- 35% — all Luna-related users by the snapshot "Before the attack" (Terraform does not participate);
- 10% — Luna holders at the moment of "Launch";
- 25% — UST holders by the snapshot "Launch".
For several categories a vesting is planned for most tokens.
"We believe that this distribution, in addition to LFG’s efforts to compensate UST holders, best serves the varying interests and time preferences of each stakeholder group. Most importantly, this creates a viable path to revive the Terra ecosystem",
— Do Kwon 🌕 (@stablekwon) May 16, 2022
The new network, he said, is developer-focused.
Voting on the proposal will take place on May 18; if approved, the launch is scheduled for May 27.
On May 8, UST lost its peg to the US dollar. This came amid a withdrawal of assets from the Anchor protocol as the deposit yield fell to 17.87%.
On May 10, the asset’s price fell below $0.62. The decline continued on May 11, after which the UST-backed cryptocurrency LUNA collapsed to $0.3. At the time of writing, the latter stood at about $0.00018, and the stablecoin at around $0.09 (CoinGecko).
The head of Terraform Labs had already put forward plans to resolve the situation for those affected by the crash of assets.
In April, Binance CEO Changpeng Zhao said that the Terra hard fork would not work, because the new network would have no value. Previously, he criticised the project team’s actions in the wake of the crash.