One of the top Ethereum-based DeFi protocols, Lido sparked a community debate as it contemplates backing Terra after its reboot.
A community proposal backed by the main Lido team lays out four possibilities for users to consider when it comes to funding Terra, to eventually allow community voting on the matter.
The move comes as LUNA holders grow increasingly supportive of a Terra hard fork, which will result in the formation of a new Terra blockchain.
The blockchain which was dubbed Terra V2 will be bereft of the stablecoin UST, which was a major contributor to Terra’s drastic decline.
Lido is one of the oldest and biggest DeFi providers. According to data from DeFi Llama, it is now ranked third in terms of total value locked which stands at $8.6 billion.
Lido provides users with four possibilities on Terra
The proposal notes that Lido on Terra V1 was a huge success, drawing in over $10 billion in total value locked in. However, it warns that supporting Terra V2 could put Lido at risk of government scrutiny and a lack of adoption.
As such, users have four options: reject the reboot, support the reboot but refuse to accept tokens from builders on the blockchain, support the reboot but accept some builder tokens while donating the rest to impacted UST holders, or fully embrace the reboot.
The proposal points out that Terra’s community goodwill is likely to be zero following the fiasco, and that backing the relaunch could jeopardize Lido’s reputation.
The Terra support proposal gets mixed initial reactions
The proposal has received a considerable amount of tweets negating the support of Terra V2. Users point out that exposure to a possible Terra crash might severely harm Lido’s ecosystem. A lack of support for Terra V2 also means that Lido may be unable to regain its costs of backing the project.
But the Lido community, on the other hand, was more enthusiastic about supporting Terra. Several responses favored the third option, arguing that being an early supporter would benefit the protocol. Particularly if the reboot was successful.