(Bloomberg) -- Terraform Labs co-founder Do Kwon offered another proposal to revive its troubled Terra blockchain by getting rid of the failed TerraUSD stablecoin and revamping the project into a new network.
Kwon wants to copy the blockchain’s code to create a new network, called Terra, and to distribute new tokens to former Terra supporters like key app developers, those whose computers order transactions on the network, and those who still hold 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 for a way out of the crisis. But many long-time crypto experts aren’t hopeful. Zhao Changpeng, chief executive officer of the world’s biggest crypto exchange and an early Terra investor, Binance, said in a tweet that forks -- the copying of the blockchain that Kwon is proposing -- “don’t create value.”
The Luna Foundation Guard, the entity set up by Terraform Labs to maintain TerraUSD’s peg to the dollar, used up roughly $2.9 billion in crypto reserves since May 7 trying to stabilize the token, data compiled by Bloomberg based on figures released Monday on LFG’s unverified Twitter account show. The reserves stood at almost $3.2 billion before, according to the data.
“The Terra ecosystem was great in terms of transactional execution, maintaining low costs per transaction and teams building upon it,” said Min Park, general partner at Lunatic Capital, which invests in projects built on Terra. “This [proposal] ensures the continuation of works and progress for the time being of projects present and future. However, we would recommend to our teams that not being reliant on one ecosystem would be a great way to reduce concentration risk.”
Unlike collateralized stablecoins such as Tether, UST primarily used algorithms and trader incentives involving its sister coin Luna to maintain a 1-to-1 peg with the dollar. As the token grew in prominence, its backers started to build a massive war chest of Bitcoin and other cryptocurrencies as an additional backstop to UST.
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