On Sunday, Ethereum founder Vitalik Buterin stated that any efforts by Terra to compensate its holders should be directed on the most vulnerable.
Buterin requested in a tweet that Terra’s developers focus their recovery efforts on UST holders who were not whales, but rather smaller, retail investors.
The ETH founder’s remarks were in response to a thread on Twitter by @PersianCapital, which pointed out that the majority of UST supply on Anchor Protocol, which was the epicenter of the stablecoin crash, was concentrated among whale holders.
Terra’s recovery could be biased in favor of whales
@PersianCapital mentions a Terra governance proposal that proposes leveraging the blockchain’s $1.5 billion Bitcoin reserves to give UST holders some value back. The Terra community has responded well to the proposal made last week.
But under such a plan, whales, account for about 82% of all UST holders. They would receive a higher stake than smaller, more vulnerable holders.
The $1.5 billion, according to the Twitter user, could be better spent compensating for smaller wallets. These wallets account for 99.6% of all UST holders by value. Every dollar invested might be returned to traders who need it.
Buterin agreed, saying that the disadvantaged Terra holders deserved help more than their wealthy counterparts.
Coordinated sympathy and relief for the average UST smallholder who got told something dumb about “20% interest rates on the US dollar” by an influencer, personal responsibility and (sorry for your loss) for the wealthy.
-Buterin
But where is the Terra reserve?
UST’s peg has gradually eroded, now standing at less than $0.2, despite various recovery attempts. Terra has released a record quantity of LUNA and burned extra UST to keep the peg afloat. Nothing looks to be functioning properly.
Last week, Terra founder Do Kwon said he will use the project’s $1.5 billion reserves to protect the blockchain’s developers
But Kwon hasn’t revealed much about the situation so far. This has raised a plethora of doubts over where Terra’s Bitcoin reserves are currently.
