The story that sees protagonists the LUNA and UST tokens of the Earth ecosystem continues to develop, in a phase in which the collapse of the ecosystem is a fact, the community is licking its wounds and the founder of Terraform Labs, Do Kwon it is making proposals to understand how to re-establish the ecosystem and give users back what they deserve.
Over the course of Friday Kwon, he proposed a “Earth ecosystem rebirth plan“which would include a reboot of the entire Terra blockchain and redistribution of ownership of the network to UST and LUNA holders through 1 billion new tokens.
Kwon admitted that the Earth ecosystem suffered a “total collapse”: “Even if the anchorage of UST were to eventually reset after the capitulation of the margin traders, the owners of LUNA were liquidated and suffered such severe dilution. that the ecosystem will be missing to rebuild from the ashes. UST holders must own a large share of the network, as the debt holders of the network deserve to be compensated for the tokens they kept to the end. ”
A lot of noise on this, so let me comment.
For 59 minutes we were quoting prices 30-40x ABOVE market prices for Luna due to technical glitch that affected the retail app and NOT the exchange. https://t.co/XMjSnWQ6aO
Kris | Crypto.com (@kris) May 13, 2022
But also on Friday another little drama took place, this time starring the cryptocurrency exchange Crypto.com. The company has in fact suddenly suspended trading for LUNA, as some “price errors” would have occurred in the range between 12:40 and 13:39 UTC on May 12th. The exchanges that took place in that time window allowed some users to forfeit a profit of 30-40 times higher than what it should have been. Not only that: the exchange has also announced that it has canceled all the transactions that have taken place and to reimburse all users affected by the problem with $ 10 in Cronos tokens.
Crypto.com was among the few exchanges to keep trading open for LUNA and UST, where several other competitors, including Binance, had decided to stop operations on the tokens of the Earth ecosystem after the temporary blocking of the blockchain. The past days have obviously still been characterized by very strong volatility, where many investors and traders have tried to recover the losses accused with the collapse of the value of the two tokens. On the day of May 14 there was, in a short moment, a surge in the value of the LUNA token of about 600%. At the time of writing, the LUNA token has a value of $ 0.0002, for a total capitalization of $ 1.31 billion: at the beginning of May, when LUNA hit its all-time high, the total capitalization was of 41 billion dollars.
Meanwhile, the CEO of DSRV, a company specializing in blockchain operations and also acting as a validator of the Terra blockchain, claims that the old blockchain should be permanently closed and invites the other ecosystem validators not to accept the hard fork proposed by Do Kwon in his reconstruction plan. DSRV runs a validator node which has 9.36% of the voting power on the blockchain.
Personal opinion. NFA.
This won’t work.
– forking does not give the new fork any value. That’s wishful thinking.
– one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).
Where is all the BTC that was supposed to be used as reserves? https://t.co/9pvLOTlCYf
CZ 🔶 Binance (@cz_binance) May 14, 2022
The idea that the hard fork proposed by Do Kwon may be a bad idea also shared by Changpeng Zao, CEO of Binance. According to “CZ” it would be more appropriate to avoid forking and instead approach the problem by organizing a “coin burn” in order to reduce the money supply and help restore the value of the tokens.
Finally, a prominent personality of the blockchain panorama also expressed itself on the matter, Vitalik Buterin. The Ethereum pap has in fact shared his point of view on the situation, arguing that Terra Labs should give priority to small “hodlers” and investors in whatever repayment plan should be proposed.
Strongly support this. Coordinated sympathy and relief for the average UST smallholder who got told something dumb about “20% interest rates on the US dollar” by an influencer, personal responsibility and SFYL for the wealthy. https://t.co/YfNlpvAizg
vitalik.eth (@VitalikButerin) May 14, 2022
Among the various proposals that are emerging in these phases there is also one that suggests give priority to repayment of all initial deposits (not the yield) of UST small holders for the purpose of “improving morale and sentiment in general,” by taking time to try to figure out how to deal with larger creditors and investors at a later date. Such a measure would cost between $ 1 and $ 1.5 billion.
Buterin supported this proposal, expressing himself through a tweet published yesterday, and stressing that the focus should be on the smallest investors before thinking about “whales”.
Finally, the most recent evolution of the story concerns Luna Foundation Guard which today released a statement explaining how it distributed millions of dollars in cryptocurrencies in an effort to keep UST’s peg to the dollar. In the statement, LFG admits that Bitcoin reserves are almost completely exhausted: on May 8, the Foundation transferred over 50,000 bitcoins to negotiate with a counterpart that could collaborate and support the operations – which later proved useless – to maintain the value of UST. On May 12, LFG sold another 30,000 bitcoins from its reserves to Terraform Labs, in a “last ditch effort to defend value”.
1 / As of Saturday, May 7, 2022, the Luna Foundation Guard held a reserve consisting of the following assets:
80.394 $ BTC
39.914 $ BNB
26,281,671 $ USDT
23,555,590 $ USDC
1,973,554 $ AVAX
697.344 $ UST
1,691,261 $ LUNA
LFG | Luna Foundation Guard (@LFG_org) May 16, 2022
The rest of the reserves, which once amounted to around $ 3 billion, are now almost completely depleted. The remaining funds will be used to compensate the remaining users of UST, giving priority to the smaller owners, just as desired by the proposal also shared by Buterin.
In any case at this stage Doubts remain about the actual ability and possibility of the project to rebuild everything or whether the actions taken will simply be limited to allowing investors to recover their losses.
We would like to thank the writer of this write-up for this incredible material
Terra e LUNA, the story continues: is reconstitution possible?
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