Terraform Labs co-founder Do Kwon offered another proposal to revive his troubled Terra blockchain by ditching the failed TerraUSD stablecoin and revamping the project into a new network.
Kwon wants to copy the code from the blockchain to create a new network, called Terra, and distribute new tokens to former Terra supporters, such as developers of key applications, those whose computers order transactions on the network, and those who still have TerraUSD, Kwon wrote in a post on a research forum.
This is Kwon’s second proposal to revive the network. Many stakeholders who lost money when TerraUSD collapsed are hoping to find a way out of the crisis. But many longtime crypto experts are hopeless. Zhao Changpeng, chief executive of the world’s largest cryptocurrency exchange and an early investor in Terra, Binance, said in a tweet that forks, Kwon’s copy of the blockchain, “do not create value.”
Luna Foundation Guard, the entity created by Terraform Labs to maintain TerraUSD’s peg to the dollar, has used roughly $2.9 billion in crypto reserves since May 7 trying to stabilize the token, data compiled by Bloomberg based on figures released on Monday on LFG’s unverified Twitter. account show. Reserves stood at nearly $3.2 billion earlier, according to the data.
“The Terra ecosystem was great in terms of transaction execution, keeping costs per transaction low, and teams that built on it,” said Min Park, a general partner at Lunatic Capital, which invests in projects built on Terra. “This [proposal] ensures the continuation of the works and the progress for the moment of the present and future projects. However, we would recommend to our teams that not relying on an ecosystem would be a great way to reduce concentration risk.”
Unlike collateralized stablecoins like Tether, UST primarily used algorithms and trading incentives involving its sister coin Luna to maintain a 1-to-1 peg to the dollar. As the token grew in prominence, its backers began building a massive war chest of Bitcoin and other cryptocurrencies as additional backing for UST.