TerraUSD founder Do Kwon has unveiled a new “revival plan” for the Terra ecosystem after the collapse of its stablecoin & sister token Luna last week fed a wider cryptocurrency crisis.
The crypto entrepreneur called for a hard fork of the existing Terra blockchain, which would ditching the failed TerraUSD stablecoin completely abandoned and a new community-owned chain created.
He suggested in a blog post Monday that the legacy chain could be called Terra Classic, with its token renamed Luna Classic (LUNC). The new chain would be known as Terra and its original token would take on LUNA name.
“The failure of the $UST pegs is a Terra DAO hack moment: a chance to rise-up from the ashes,” Kwon said in the post, in apparent reference to Ethereum hard fork after 2016 hack of crypto collective DAO.
“The Terra ecosystem and its community are worth preserving,” added the Terraform Labs co-founder.
Terraform Labs run terraUSD (UST) & Luna project last week over concerns of a UST death spiral and helped spur the bloodbath in the crypto market that could impact other coins The algorithmic stablecoin lost its peg to the dollar, falling as low as $0.30 on Wednesday, while the luna was down more than 97%.
According to the proposal, people holding Luna on the existing Classic chain will get an airdrop of the new Luna token, as well as blockchain developers & UST holders. Terraform Labs will not receive any of the one billion redistributed tokens as their wallet will be wiped. The airdrop will go-ahead on May 27.
Kwon reiterated that after the stablecoin collapsed, he wanted to compensate “the remaining users” of UST. In a series of tweets Monday, Luna Foundation Guard, led by Kwon, said the nonprofit organization is “trying to use its remaining assets to compensate $UST users, smaller holders first.”
The proposal builds on an earlier revival plan unveiled by Kwon on Friday. In response to the discussion about this, Binance CEO Changpeng Zhao said forking the blockchain would not work.
“Personal opinion. NFA. Forking doesn’t value the new fork. That’s wishful thinking,” Zhao said in a weekend tweet.
The collapse of the Terra ecosystem could prompt lawmakers to accelerate the development of regulation around cryptocurrencies, Circle CEO Jeremy Allaire said Monday. The Securities and Exchange Commission has dubbed the crypto space the “Wild West” for its lack of consumer protection and frequent scams.
According to data from CoinMarketCap, Luna is down almost 9% on the day to hit $0.0001907 as of Tuesday morning. It is almost 100% below its all-time high of $119.18 set on April 5, but is below its all-time low of $0.000000999967.UST continued to trade below its dollar peg, falling 2.4% to $0.1243.
The crypto market crash came amid rising investor fears over risky assets as the Federal Reserve tightens its grip on its ultra-easy money policy by raising interest rates to combat red hot inflation.