After being completely off the radar for almost 3 days, Do Kwon finally comes out of the silence to take stock and come up with a solution. Calling himself “heartbroken”, he proposes to give the reins of the ecosystem to the developers and the community by making a fork of the Terra blockchain. This would involve issuing a new token that will be redistributed to LUNA and UST holders.
An intervention of Do Kwon that we expected more
Many were waiting for it. Since the beginning of the long agony of UST and then LUNA, which gradually drew each other into a downward spiral, the Terra community was waiting for a word from Do Kwon, the founder of the blockchain.
Indeed, after the UST started to depeg (lose its flagship value of $1) on May 9, Do Kwon only intervened on May 10 and 11, first to try to calm the prevailing panic a bit, and then to announce a first solution.
“Close to the announcement of a recovery plan for $UST. Hang in there” he had thus tweeted on May 10 afternoon, at a time when the UST had slipped 10 cents, touching $0.90, a situation that still seems light today. The LUNA was then still close to 30 dollars.
The next day, in the early hours of May 11, a new message was sent to reassure the community: “We are getting closer… Stay strong, Lunatics. [Stay strong, Lunatics”. Later that day, he made a long thread to report on the situation and announce a possible collateralization of the UST.
Then, Do Kwon was completely off the radar for almost 3 days, an interminable wait for those who had held on – following his advice -, wondering at every moment if UST was going to rise again.
He finally came back to speak this morning, in the night, announcing that he was “heartbroken” and specifying that he had not benefited financially from the situation.
State of play and future of Terra
Do Kwon’s exit is now a bit more pessimistic, and probably more appropriate to the reality of the events. At the time of writing, the UST is down to $0.14 and the LUNA is a disastrous $0.00018, which seems unreal compared to its ATH (highest price) of $120 in early April.
“I still believe that decentralized economies deserve a decentralized currency – but it is clear that the UST in its current form will not be that currency. Neither I nor the institutions with which I am affiliated have profited in any way from this incident. I did not sell either LUNA or UST during the crisis.”
He also announces that Terra teams will soon develop how Terra’s then-billion-dollar staggering reserve was used to ensure the UST peg:
“We are currently working on documenting how the Luna Foundation Guard (LFG) Bitcoin (BTC) reserves were used during the depeg phase. Please be patient with us, as our teams are juggling multiple tasks at once.”
In the face of disaster, he proposed a solution on Agora, Terra’s forum dedicated to its evolution, to try to save what’s left of the ecosystem, or at least its fundamental structure.
“What we should be looking to preserve now is the community and developers who give value to Terra’s blockspace – I’m confident that our community will form a consensus around the best path forward for itself, and find a way to rise again.”
The solutions being considered at this time
Do Kwon’s proposal, dubbed “Terra Ecosystem Recovery Plan,” focuses on preserving the community, which includes developers and users.
“We’ve built one of the largest and most vibrant developer ecosystems in the cryptocurrency space, with some of the smartest minds in the world working on products with the best UI/UX. Terra Station has a large install base, with over a million users worldwide.”
Also, the best solution according to the founder would be to perform a fork of the blockchain to redistribute the governance of the network via a billion new tokens distributed between :
- 40 % : LUNA holders before the depeg begins;
- 40 % : UST holders by prorating;
- 10 % : LUNA holders before blockchain stops;
- 10%: Funds dedicated to the future development of the ecosystem.
In this way, Do Kwon wants to favor the part of the community that has always supported the ecosystem via LUNA tokens, while rewarding those who bought LUNA during the raid.
In conclusion, although the situation has already been dramatic for many people from a financial point of view, the foundations of Terra may not be abandoned. To be continued.
