Despite very deep declines, the CEO of the Terra project still sees chances for its survival. Learning from his mistakes, he points to the possibility of saving the ecosystem through a hard fork.
Forking the chain to be the solution
Do Kwon is not laying down his arms and is taking steps to save the LUNA project. In a tweet dated May 16, he proposed a hard fork, which will be the final salvation for Terra. It may come as a surprise that according to the new plan LUNA will no longer be linked to the algorithmic stablecoin UST (Terra USD). The hard fork will result in a split of the network, where the older part will become Luna Classic (LUNC), while the new one will take the existing name of LUNA. According to preliminary assumptions, the new blockchain should begin operations on May 27. As Do Kwon reports, these decisions are the result of dynamic discussions, supported by community feedback, and as a result, present the best possible development path.
Details of the rebuilding plan
The new plan to save the Terra ecosystem includes distributing the LUNA token to affected LUNC holders, USTs, and developers who are de facto essential to maintaining the Terra blockchain. Additionally, Do Kwon will no longer have control over the Terraform Labs wallet, which was previously responsible for holding a portion of the blockchain reserves. This is expected to make Terra a fully community-controlled space. The supply of LUNC tokens is to be limited to one billion units. 25% will be reserved for the community pool, 70% will be distributed to LUNC and UST holders, and the remaining 5% will go to the developers.
Will this solution become an effective way to save LUNC? Time will tell. However, this is not the first of the proposals put forward by Do Kwon. The CEO of Terraform Labs has been busily searching for solutions to the problems encountered, presenting various options in recent days. However, there have been some objections to the hard fork. The CEO of the Binance exchange, Changpeng Zhao, speaks about them. He points to changes in the planned amount of tokens in circulation and says:
“Reducing the supply should be done by burning, not forking over the old term and abandoning everyone who tried to save the coin. I do not own either LUNA or UST. I am simply commenting.”
History that teaches
Recall that the problems of the Terra ecosystem manifested on May 9, a strong destabilization of stablecoin UST, which was algorithmically linked to the LUNA token. Terra USD, which had its value frozen at the level of USD 1, by the day of writing this text had lost 90% of its price, trading at the level of USD 0.1. The need to patch up the resulting hole resulted in a massive sell-off of LUNA, which from May 9 to May 13 fell from $65.25 to $0.000001, dragging almost the entire cryptocurrency market down with it. The story served as a warning to investors, showing that even the most elaborate and ambitious projects can lose a lot in the blink of an eye.