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The luna price, which traded as low as $100 per luna last month, crashed to near zero this week — causing the algorithmic stablecoin UST to completely lose its peg to the US dollar — amid a $1 trillion crypto crash that left the U.S. bitcoin price dropped by more than 20%.
Now the chief executive of UST and luna developer Terraform Labs, Do Kwon, has pitched a revival plan that could divide ownership of the network among UST and luna holders — raising the luna price by more than 1,000% as traders bet the project could recover.
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“While UST has been the central story of Terra’s growth story over the past year, the Terra ecosystem and its community is what is worth preserving,” Kwon wrote in a post on a Terra discussion forum, adding that the Terra community “ reassemble the chain to preserve the developer community and ecosystem.”
The reconstruction – basically a reboot of the terra blockchain – would create 1 billion tokens to be distributed among various stakeholders in the community, with 40% going to luna holders before the UST depegging, 40% to UST holders” pro-rata at the time of the new network upgrade,” 10% to luna holders before the chain shuts down, and 10% to the “Community Pool to fund future development.”
The blockchain underlying luna and UST was shut down multiple times this week to prevent “governance attacks” after “serious [luna] inflation.”
Terraform Labs and the Luna Foundation Guard, tasked with supporting UST, printed several billion luna tokens this week — raising the luna supply from 340 million to 6.5 trillion last week — in a failed attempt to break the UST link. to preserve the dollar.
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“Terra needs a community to continue to grow and make its blockspace valuable again – the only way to do this is to make sure that before the attack started, token holders, the most loyal community members and builders, stick around to build value.” continue to provide,” Kwon wrote, adding that the ecosystem “in its current state” will not survive.
In a sequel tweet threadKwon said he is “heartbroken” at the collapse of luna and UST, but said he is confident the “community will reach consensus on the best way forward for itself and find a way to get back on its feet.”
Others in the crypto community have also suggested that the project could still survive in one form or another, with Binance chief executive Changpeng Zhao, often known simply as CZ, saying “progress” has been made.
“Luna blockchain resumed, no more minting”, CZ Posted to Twitter. “And resumed deposits, withdrawals and trading. Trading is important to existing holders.”
The collapse of luna and UST this week came amid a downturn in the bitcoin, ethereum and broader crypto market that left UST vulnerable, with some speculating that there may have been an orchestrated attack on the stablecoin.
“The slump in general markets created the conditions for an attack on UST, which was inherently vulnerable,” Cory Klippsten, the founder and CEO of bitcoin buying app Swan Bitcoin, said in a Telegram message, adding. : “the effects of the settlement are far-reaching, and the ultimate magnitude still unknowable.”