Terra co-founder Do Kwon has proposed Terra Ecosystem Revival Plan 2 in a bid to save the chain by hard forking.
The proposal argues that “Terra is more than $UST,” and Terraform Labs aims to put this proposal up for a governance vote on May 18 Asia time.
Earlier this week, Kwon had announced collateralized readjustment in its mechanism as part of the chain’s first recovery plan to re-peg UST to the U.S. dollar.
New chain minus the algorithmic stablecoin
Calling the UST peg failure, Terra’s DAO hack moment, the co-founder assured a fresh start after he released the second proposal for the ecosystem. The Fork proposal will split the Terra chain into a new chain without the algorithmic stablecoin.
Kwon stated that the old chain will be called Terra Classic (token Luna Classic – LUNC), and the new chain to be called Terra (token Luna – LUNA).
By 21 May, TFL aims to make network launch instructions available for the validators, with the network launch set for 27 May if the proposal passes without hurdles.
As per the release, Luna will be airdropped across Luna Classic stakers, Luna Classic holders, residual UST holders, and essential app developers of Terra Classic. Out of the 1 billion Luna tokens, 25% will belong to the Community Pool. Kwon also noted that “Terra 2.0 is focused on developers,” – who will get an immediate emergency allocation of Luna tokens to ‘fund the runway.’
Therefore, a large portion of the token distribution is said to be allocated to existing Terra Dapp developers, while aligning long-term developer interest with the ecosystem. The proposal highlights, “Network security to be incentivized with token inflation. Target staking rewards of 7% p.a.”
Chain fork expected to bring consensus
Kwon has backed the decision by stating that competing interests from varied stakeholders like LUNA holders, UST holders, Terra builders, etc. make it unlikely to achieve consensus on a plan. Which could negatively impact broader crypto adoption, the co-founder remarked.
Meanwhile, on May 16, the Luna Foundation Guard (LFG) revealed plans to compensate remaining UST users after the market meltdown.
The non-profit backing Terra said that it sold almost all of the $3.5 billion bitcoin it held in reserve “as a last-ditch effort to defend the [UST] peg.”
LFG said that while it is debating distribution methods, the foundation will use its remaining assets to compensate the smallest holders first.
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