(Bloomberg) -- A proposal by the founder of the troubled Terra ecosystem to salvage the project was approved, averting a total collapse of one of the most-watched experiments in decentralized finance.
Under the newly approved structure, the original blockchain will be known as Terra Classic, while its native token Luna, which plunged close to zero this month, will be renamed Luna Classic with the ticker LUNC. The new Terra blockchain will start running a token under the existing Luna name and ticker.
Do Kwon, the crypto entrepreneur behind Terra, had proposed to split the blockchain in half, carrying out what is known in the industry as a “hard fork” of the network. His suggestion was later amended by Terraform Labs, the project’s main operator, to instead forge an entirely new Terra blockchain and leave the old network to be managed by users.
Terra’s unraveling, which started earlier this month with the implosion of the algorithmic stablecoin Kwon had touted relentlessly, marked one of the biggest busts in the crypto industry’s history. While the outcome of Wednesday’s vote represents a victory of sorts for Kwon and his supporters, doubts persist about whether Terra can ultimately be revived.
Read more: Do Kwon Proposes Creating Another Blockchain From Terra’s Ashes
The process means Terraform Labs is effectively abandoning the stablecoin TerraUSD, or UST, which from now on will only trade on the Terra Classic blockchain. Designed to maintain a 1-to-1 peg to the dollar, it traded at less than 7 cents on Wednesday.
Kwon said the new Luna tokens would be distributed to previous holders of Luna and UST in a so-called “air drop,” relying on a snapshot taken of the old Terra network to verify participants. All decentralized applications and assets built on the old Terra chain will need to migrate to the new one, Terraform Labs said, with Luna and UST holders advised to transfer their tokens to native Terra wallets rather than holding them on exchanges.
The proposal for Terra 2.0 was met with vigorous debate and backlash from many validators and investors, who sought restitution from the project’s leadership after watching the value of their holdings disintegrate.
A final tally of the votes on Kwon’s proposal on Wednesday showed 65% in favor and 21% abstaining. Some 13% of votes were “no with veto,” short of the 33.4% needed to scuttle the proposal.
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