Developers of the Terra network, with its founder Do Kwon at the helm, proposed a new way out to solve the collapse experienced by their terra USD (UST) and terra (LUNA) cryptocurrencies. Proposal 1623 proposes to fork the network and has 90% support among validators.
The one who brought this new idea to the table was none other than Do Kwon, the leading developer of the UST stablecoin and main accused of the debacle of the crypto asset, which caused huge financial losses for many investors. Also the Terra Developers Alliance (Terra Builder Alliance) expressed his support to this motion.
Basically, the proposal 1623 suggests creating a new network, Terra 2.0, and leaving the old one behind, which would become known as Terra Classic. His token, meanwhile, would be known as Luna Classic (LUNC).
The new network would not have a stablecoin, that is, a cryptocurrency tied to the value of an underlying asset, which in the case of UST was the US dollar. Rather, the focus of the new network would be on the LUNA cryptocurrency, which was previously issued or burned to regulate the issuance of UST and thus retain its $1 value.
It is new focus proposed by Do Kwon is totally opposite to his previous idea, reported by CriptoNoticias, which proposed to “sacrifice” the price of LUNA to save the UST stablecoin.
The new cryptocurrency LUNA, would be distributed through an airdrop to stakers and holders of Luna Classic and UST, as well as the developers of Terra Classic. In addition, it is detailed that the wallet of TFL, a company associated with Fundación Luna for the management of its reserves, will not be included in the airdrop. Thus, “the Terra community will be the full owner of the network,” it is detailed.
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If this proposal is approved, those who owned LUNA before the cryptocurrency crash will receive 35% of the total airdrop, while UST holders will receive 10%. Funds will also go to those who acquired the crypto assets after the “attack” (as Do Kwon calls it) on the Terra network. Also, a part of the tokens will be reserved for emergencies for developers of decentralized applications on Terra.
How is the vote on the new Terra network?
Until the time of publication of this article, 157,160,525 votes are counted, of which 80% are in favor of the so-called “Renaissance of the Terra network”. However, there is 19.2% who have voted “No with veto”. This is a type of negative vote that conditions the implementation of a proposal if it exceeds 33.4% of the votes.
Anyway, the project has already passed the minimum threshold of votes for its acceptance, which is 50% of the votes, despite the fact that there are still approximately 219 million votes to be cast. For the vote to be valid, at least 40% of the validators or delegates must participate, which is equivalent to approximately 150 million votes.
Mixed opinions about the new Terra
Some participants of the Terra ecosystem celebrated the new Do Kwon proposal. For example, Flipside Crypto, which brings together various network developers, manifested that Terra “is a passionate community (…) working to create a better future” and that the new Terra 2.0 project “excites” them.
WhiteWhale Terra, another developer organization, opined that “it is impossible to make everyone happy in this situation and the proposal will never be perfect, however, all things considered, we agree with the other builders that this is a viable way forward.”
On the other hand, criticism of the new project did not take long to appear. Konstantin Boyko-Romanovsky, CEO of AllNodes, a validator with 1.49% votes within the community, criticized the “authoritarian” leadership of Do Kwon and assured that the new plan for Terra does not contemplate the will of the community.
Regarding the repercussion on networks, a twitter user questioned the distribution of tokens in the airdrop, on the grounds that those who bought after the crash will receive a very high percentage of the new tokens. This would favor those who speculated for profit over early LUNA holders, they say.
Meanwhile, other people shared a report more detailed about the economic model of the new cryptocurrency and criticized the fact that it would have an increase in issuance of more than 1400% in the first five years.
Finally, it should also be noted that one of Terra’s premises was to function as a network specialized in stablecoins. The new version that could be approved does not include a cryptocurrency of this type, so many people would not approve it as they did with the original network.