Do Kwon, co-founder of the faltering Terra Luna blockchain has presented a new plan to rebuild the ecosystem. Extreme market volatility and inherent protocol design problems wiped out the vast majority of the blockchain’s market cap. After that, Kwon believes a Terra hard fork will save the day.
Terraform Labs will present a new governance proposal to fork the Terra Luna blockchain called Terra (LUNA) on May 18.
Terra hard fork: new LUNA blockchain soon?
However, the TerraUSD (UST) stablecoin will not be linked to the new chain. Meanwhile, the previous Terra blockchain will continue to exist with UST. And it will be under the new name Terra Classic (LUNC). If Kwon’s proposal is approved, the new LUNA blockchain will go online on May 27.
According to the proposal, they will airdrop new LUNA tokens to LUNC holders, UST holders, and Terra Classic blockchain developers.
The projected LUNC supply is capped at 1 billion, with 25% going to the community pool, 5% going to essential developers, and 70% going to LUNC and UST holders at various events in May, subject to vesting rules.
Will it work?
Hard forking aims to bring the once-thriving LUNA and UST ecosystems back to life. However, Changpeng Zhao, CEO of Binance, believes that a Terra hard fork may not be the best solution. Instead, he advocated that the Terra community spend its Bitcoin (BTC) reserves first to repurchase UST to reestablish pegging.
“Reducing supply should be [done] via burn, not fork at an old date, and abandon everyone who tried to rescue the coin,” Zhao said. “I don’t own any LUNA or UST either. Just commenting.”
He stated that “minting, forking, don’t create value.” However, he recommended buying back and burning as a great way to boost the token’s market value.
The Binance CEO added that he will support Terra’s community but that the entity should be more transparent about recent developments.