On Friday, Terra's co-founder Do Kwon, who vanished this past week due to the collapse of the coin, announced a new plan to resuscitate the $30 billion blockchain network, which has seen its algorithmic stable coin UST and LUNA token crater. Kwon wanted to offer a financial scheme to boost holders of criptocurrencies.
In the past, Kwon said 95 percent of coins are going to die, but there's also entertainment in watching companies die. Even if the peg were to be restored after the last marginal buyers and sellers have capitulated, the holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes, said Kwon. The UST has lost too much trust in its users to play the role, while a decentralized economy does need decentralized money. To revitalize the Terra ecosystem, Kwon proposed a redistribution scheme that would reset the number of LUNA governance token to 1 billion from 6.5 trillion token. He claims forty percent would go to those who held UST, and another 40% would be awarded to those who held UST before it was de-pegged. Another 10% would go to LUNA holders, while the final 10% would fund the continued development of the network.
There are almost 100 stablecoins in existence. Most of the money on the dollar is pegged to a more stable asset like gold or a fiat currency like the U.S. dollar. The algorithmic stable coin UST and its sister token LUNA dropped precipitously in price over the past week, with LUNA going from $100 in April to a jaw-dropping price of $0.0001 on Friday, making it effectively worthless.
UST and LUNA are sister tokens designed to work together via financial engineering that ensures stability through an algorithm. If the price falls below $1, the sister token would in theory be able to stabilize the other by allowing users to swap one for the other. Both tokens fell dramatically in price over the past week and neither could maintain its $1 peg, causing both to collapse. This is also different from the normal way stable coin works, since it is not pegged to a real-world stable asset like the U.S. dollar or gold.
The de-pegging of UST stablecoin and the chaos that ensued for LUNA, which reached an astonishingly low price bordering zero this week, has impacted collateral likeBitcoin. Kwon acknowledged the losses of investors but said he was hopeful that the community can reach a consensus on how to revive the Terra ecosystem. Kwon said that we have built one of the largest and most vibrant developer ecosystems in the world, with some of the smartest minds working on products with the best UI UX. With the bloodbath at Terra, developers are fast migrating to rival networks.