Ding-dong, Terra is dead… (and so is its namesake stablecoin.)
And Ethereum’s co-founder, Binance’s CEO, and FTX’s CEO have now marinated in its untimely demise for enough time. This week, they’ve voiced their two cents:
Binance CEO Changpen Zhao (or “CZ” for short) tweeted that Terra is ngmi. He said that “forking does not give the new fork any value”, which can be made out to say that Terra would be worthless regardless of how many times they decided to start over. He voiced his desire for small users to be compensated first.
FTX CEO Sam Bankman-Fried tweeted that Terra was “very transparent” about its riskiness, but indicated that the “mass enthusiasm” around the product, which was used to delude unaware retail investors into YOLOing in was “… probably bad.”
Ethereum co-founder Vitalik Buterin voiced that Terra should make good for its smallest holders first — citing influencer culture and misleading advertising about how high-risk of an investment it was.
But as we’ve said before, old habits die hard — and the chain’s creator and foremost figure, Do Kwon, insists that Terra will rise once again… In spite of leaving dozens of money managers and thousands of scrappy retail investors with a stablecoin that isn’t very stable. (You know things are bad when unwanted strangers are visiting your home.)
Though many of crypto’s most prominent voices have echoed the desire for Terra to compensate small retail investors first, and strangers showing up to his house, Do Kwon has proposed an even worse “Terra revival plan” than was already proposed.
We wrote about Do Kwon’s v1 proposal last Friday. Today, Do Kwon released a v2 proposal. Some elements (such as a 1 billion LUNA cap) were the same. However, Do Kwon proposed “forking” the chain and starting anew… and he wants to make sure that nobody runs for the door too quickly.
As part of his new proposal, 35% of the 1 billion LUNA supply will go to “all bonded and unbonded Luna”, which will be paid out in a “1 year cliff” and variable vesting schedule. Wow, that’s not confusing at all…
25% will be paid into a community pool, which will be controlled by “governance” (code for: whoever stakes their Luna and votes on proposals).
25% will be paid to $UST holders as of May 27, 2022, and they will also be subject to a 2 year vest…
Really, frankly, who cares about the rest? You can read the whole proposal here.
Allow us to spoil the comments, though: nobody likes this plan. People are not happy with it. Two of crypto’s most foremost figures have already come out against prioritizing whales… And yes, it’s extremely easy to see why they’re mad.
Terra imploded. $50 billion worth of market capitalization, including ~$19 billion which was presumed by many misinformed retail investors, went up in flames last week. Now, instead of trying to restore credibility, Terra’s foremost leader is trying to think about a sustainable future for a chain that has neither sustainable market mechanics, nor presumably a future at all if that future is predicated on keeping people locked in a burning building (the vesting schedule).
As of this writing, the Terra chain is valued at $1.3 billion. There’s still reportedly more than 10 billion $UST in circulation, which is only worth $1.3 billion. And this “revival plan” has not been received well at all. Terra fell -14% today and TerraUSD, which has turned into a sh*tcoin in recent days while trading below the peg, is down -30.8%.
Do Kwon’s proposal is expected to go to a governance vote on May 18. Assuming its passed, the plan will come to pass… and in spite of its massive unpopularity with the community, it looks likely to pass seeing as though the whales of Terra’s “classic chain” still command outsized influence in building its new chain.
We’ll report on this event as it progresses.