Terra Community Must Revive Network, Do Kwon Urges
After days of silence, Terraform Labs CEO Do Kwon has surfaced on the Terra governance forum. He says the Terra community should "reconstitute the chain" in the fallout from the network's death spiral.
- Do Kwon has published a post on Terra's governance forum presenting a plan to revive the network.
- Kwon has suggested issuing 1 billion new tokens for Terra community members.
- Kwon did not mention the Luna Foundation Guard's Bitcoin reserve fund, which was emptied this week as Terra's UST lost its peg to the dollar.
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Kwon has suggested resetting token ownership with a new allocation of 1 billion tokens.
Do Kwon Suggests Reviving Terra
Do Kwon has put forward a plan to revive Terra.
The Terraform Labs CEO resurfaced Friday to share a post on the Terra governance forum, advocating for a plan to “reconstitute the chain to preserve the community and the developer ecosystem.”
In the post, he noted how Terra had established one of crypto’s strongest communities and developer ecosystems “some of the smartest minds in the world.” As such, he said that the network “must reconstitute the chain” and redistribute 1 billion new tokens to the Terra community.
Kwon has suggested allocating 400 million tokens for LUNA holders prior to this week’s depeg event, 400 million to UST holders at the time of the network upgrade, 100 million to LUNA holders at the moment the blockchain was halted, and 100 million to a community pool. He added that he thinks any tokens that aren’t sent to the community pool should be staked, and security should be secured by inflating the supply by approximately 7% to incentivize users to stake their tokens.
“Terra needs a community to continue to grow and make its blockspace valuable again—the only way to do this is to make sure that token holders before the attack commenced, the most loyal community members and builders, stick around to keep providing value.”
The update follows days of silence from Kwon amid Terra’s biggest crisis to date. Last Saturday, Terra’s UST stablecoin lost its peg to the dollar after a series of intense market sell-offs, resulting in a days-long meltdown that saw the price of LUNA plummet. UST and LUNA work in balance, with one UST redeemable for $1 worth of LUNA. As UST holders rushed to exit their positions due to the coin falling below peg, the supply of LUNA dramatically increased and the price suffered. While the network was worth $30 billion a week ago, LUNA’s price is now close to zero.
Notably, Kwon neglected to mention the Luna Foundation Guard’s Bitcoin reserve fund. Earlier this week, in response to UST losing its peg, LFG said it was loaning out $750 million worth of Bitcoin and $750 million worth of UST to market makers so that they could help stabilize the price. However, that still leaves thousands of Bitcoin unaccounted for. Per the LFG’s own report, its Bitcoin reserves are empty. It currently holds about $70.57 million in AVAX, $9.05 million in UST, and $138.10 in LUNA.
Kwon closed out his post with a promise to the Terra community. He wrote:
“I hope the community can achieve speedy consensus on how to revive the Terra ecosystem. I’ll always be here.”
Editor’s note: This article mistakenly mentioned that Kwon had proposed relaunching LUNA and UST. The piece has been amended to clarify that Kwon proposed distributing one set of tokens with a supply cap of 1 billion.