Do Kwon, co-founder of Terraform Labs, has proposed a plan to save the Terra ecosystem following the historic de-pegging of its algorithmic stablecoin, UST, and the crash that drove Terra (LUNA) tokens to near-zero.
“The Terra community must reassemble the chain to maintain the community and the developer ecosystem,” Kwon wrote on Terra’s research forum on Friday.
In response to validator groups discussing the potential of forking the Terra chain, he proposed rewarding UST and LUNA holders who were unable or unwilling to sell their shares amid the price drop this week.
Validators, according to Kwon, should reset network ownership to 1 billion tokens distributed among LUNA and UST holders, as well as a community pool for future development funding.
Specifically, before the de-pegging event, 40% of the newly distributed tokens would go to LUNA holders; 40% would go to UST holders on a pro-rata basis at the time of the new network upgrade; 10% would go to LUNA holders just before the chain halted operations; the remaining 10% would go to the development pool.
Given the massive liquidity events that have occurred across the Terra ecosystem this week, Kwon believes that pegging UST to the US dollar would make a little effect. In other words, confidence in the stablecoin paradigm has been irrevocably destroyed. He elaborated:
“Even if the peg were to eventually restore after the last marginal buyers and sellers have capitulated, the holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes.”Â
Despite the fact that there is no way to entirely recover the blockchain’s value, Kwon believes the redistribution plan should pay the network’s debt holders as well as “committed community members and creators.”
Kwon’s proposal came two days after he presented a plan to save the UST dollar peg, which included doubling the protocol’s minting capacity and raising the special drawing rights pool.
