Terra co-founder Do Kwon has unveiled a revival plan for the Terra community, which will involve abandoning the UST stablecoin entirely. Instead, he suggests that validators reset network ownership under a new token by forking the chain, and distributing it to fairly compensate all damaged parties.
UST Has Failed, says Do Kwon
In a forum post on Friday, Kwon argued that Terra (LUNA) has been diluted to such a degree that its joint ecosystem with TerraUSD (UST) can no longer be rebuilt – even if UST’s peg somehow recovers.
UST was the former third-largest stablecoin pegged to the US dollar, while LUNA was a governance token that provided support for UST’s peg. Each coin has collapsed by 84% and 99% this week, respectively.
The co-founder claims the collapse has so thoroughly destroyed trust in UST that it can no longer serve as the “decentralized money” they hoped for.
“While UST has been the central narrative of Terra’s growth story over the last year, the Terra ecosystem and its community is what is worth preserving,” wrote Kwon.
Therefore, the creator proposes forking the chain, and resetting network ownership to just 1 billion tokens – down from over 6 trillion LUNA tokens currently in circulation.
Compensating the Terra Community
Specifically, 400 million of the Terra fork’s tokens will be distributed among prior LUNA holders at the time that UST had first de-pegged this month. This will not include Terraform Labs, however, as Kwon intends for the new chain to be “community-owned”.
Another 400 million tokens will be shared with UST holders at the time of the upgrade, to make them whole for holding Terra’s debt.
The next 100 million will go to LUNA’s last holders before the Terra chain was halted, with the final 10% dedicated to the community pool.
Kwon maintains that the Terra community will find another way to implement “decentralized money” to replace UST in the future.
“I hope the community can achieve speedy consensus on how to revive the Terra ecosystem,” he concluded. “I’ll always be here.”
The plans outlined pose a stark reversal from Kwon’s original UST recovery plan, which involved increasing UST’s burn rate.