What Is Terra’s (LUNA) Revival Plan 2.0? Can It Work? Read Here To Find Out
A new revival plan dubbed 2.0 was shared by Terra’s founder, Do Kwon. Read below to find out what it is and whether it can work?
Binance’s Investment in Terra (LUNA) was once worth $1.6 billion, but as of 11am on May 17, it is worth approximately $3,000. Binance invested in LUNA four years ago, and received 15 million LUNA cryptos, which it continues to hold even today.
Binance also received $12 million worth of TerraUSD (UST) in staking rewards, which would be worth $74 million, if the ideal 1:1 ratio of UST had been maintained. But UST has now lost its peg ratio, and currently trades at $0.1303 as of 11am, as per Coinmarketcap data.
So what is the next course of action for LUNA holders? Read below to find out.
Terra Luna’s Revival Plan 2.0
The founder of Terra, Do Kwon, has said that he has a recovery plan in place. In a blogpost, Do Kwon outlined several measures in order to save the Terra (LUNA) Blockchain ecosystem. read here.
The plan is divided into several parts:
New Blockchain: The existing Terra Blockchain will be forked into a new Blockchain, but without the unique arrangement of the UST algorithmic Stablecoin UST mechanism.
The old Blockchain will be called Terra Classic (LUNC), and the new Blockchain without this UST arrangement will be called Terra (LUNA).
Distribution Mechanism: The new token LUNA will be airdropped (i.e., given for free) to all those who stake i.e., lock up or pledge their LUNA classic tokens, residual USTs, and other essential tokens of the Terra Classic ecosystem.
Community-Based Crypto: Terra FormLab’s wallet address will be whitelisted for this particular airdrop of LUNA, and hence, only the community will be getting it. The ultimate goal of Terra is to be a community-owned Blockchain
oken Reset: The revival plan included a clause which said that the total new LUNA tokens in active circulation would be reset to 1 billion.
The exact distribution mechanism of this 1 billion tokens can be read here.
New Inflation Rate: In the revival plan, Do Kwon said that the existing revenue streams won’t be sufficient to cover the cost of security without increasing swap fees. Hence, he asked members of the community to incentivise the network’s security in line with the native crypto token’s inflation, which should be targeted at 7 per cent per annum
Can This Work?
Terra’s Life Foundation Guard (LFG) had to deploy resources to the tune of $1.5 billion earlier this week to stabilise the price of its tokens.
But that plan failed, and hence, this new revival plan is now being put to use. This new plan essentially makes Terra a community-owned crypto Blockchain, more like a decentralised autonomous organisation (DAO). But there are several key risks to watch out for, since most of these measures will take some time to actually materialise.
So, as a measure of prudence, Indian crypto exchanges have suspended the trading of LUNA and UST.
