Ethereum co-founder Vitalik Buterin believes the controversial Terra (LUNA) project should prioritize small hodlers as part of a planned repayment plan.
As has been widely reported, the Terra ecosystem suffered a death spiral around May 9th, which led to LUNA going into a 100% tank and Terra USD (UST) stablecoin losing its USD connection ($ 0.16 at the time of writing) .
As LUNA and UST investors are struggling with significant losses, the community is now looking at ways to rebuild the ecosystem and possibly offer relief to the large number of people who burned themselves financially.
One such societal proposal – provided that the UST dollar link eventually becomes stable – is to first repay all initial deposits (not yields) to small UST owners in order to “significantly improve public morals and attitudes” while figuring out how to classify creditors and larger investors. later. The payout is estimated to cost between $ 1 billion and $ 1.5 billion.
Buterin showed support for the idea via Twitter on May 15, pointing out that the focus should be on the smaller investor who needs the money, before going a step further by suggesting that whalers should deal with the loss:
“Coordinated sympathy and relief for the general ICT smallholder farmers who were told something stupid about” 20% interest on the US dollar “by influential people, personal responsibility and [sorry for your loss] SFYL for the rich.
Although the founder of Ethereum did not directly call for regulation, he stressed that potential protection such as financial deposit insurance could be beneficial in these circumstances.
“Interesting unrelated is labor law in Singapore. Stronger regulations for low-income employees and a greater approach for the more affluent. “IMO things like these are good hybrids,” he said.
The obvious example is FDIC insurance (up to $ 250k per person)
Interesting unrelated is labor law in Singapore. Stronger regulations for low-income employees and a greater approach for the more affluent.
IMO things like this are good hybrids. image.twitter.com/25XkfE8UVc
– vitalik.eth (@VitalikButerin) 14 May 2022
At this stage, it is unclear whether the project can be rebuilt, or whether it will aim for a temporary boom to offset investor losses, however difficult it may be. It is also noteworthy that the proposal related to Buterin’s comments was updated this week and is now being considered to pay out to all users up to a maximum of $ 50,000 per wallet.
Connected: Buterin donates $ 4 million to Uni of NSW for epidemic detection
Another idea that is floating around on the Internet is to develop a hard fork upgrade for the Terra blockchain called “TERRA 2”, as well as launch a liquidity pot to bring ICT back to normal.
Binance founder and CEO Changpeng Zhao, however, criticized the idea over the weekend, noting on Twitter that “a fork gives the new fork no value. It is wishful thinking. ”
Before the collapse of LUNA and UST, the Luna Foundation Guard held $ 2.7 billion worth of Bitcoin (BTC), and referring to the idea of rebuilding UST, CZ also asked “where is all the BTC that was to be used as a reserve fund?”
Personal opinion. NFA.
This will not work.
– fork gives no value to the new fork. It’s wishful thinking.
– not all old snapshots can be invalidated, both on and off the chain (exchange).
Where is all the BTC that was supposed to be used as a reserve fund? https://t.co/9pvLOTlCYf
– CZ Binance (@cz_binance) 14 May 2022
The founder of Terraform Labs, Do Kwon – who returned to the Internet late last week – has also proposed a reorganization of the Terra blockchain to restore “network ownership” and distribute 1 billion LUNA tokens to the community.
However, Kwon’s proposed “Terra Ecosystem Resuscitation Program” has experienced a sharp decline from popular figures in the cryptocurrency community, such as Dogecoin founder Billy Markus, who has called for Kwon to leave the sector and also pointed out:
“If they want to pay the victims of their failed ethics, instead of using new money from new victims, they should use the money they have already transferred from investors to pay them back.
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