Wednesday, December 7, 2022

Do Kwon Aims To Fork LUNA’s Blockchain And Make Terra Classic

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Do Kwon aims to fork LUNA’s blockchain and make Terra Classic a part of the new strategy to save the network and ditch the UST stablecoin so let’s read more today in our latest cryptocurrency news.

Under the new plan proposed by Do Kwon, the new chain will be called Terra Classic and won’t use the UST stablecoin. Terra users will soon vote whether to fork the blockchain as Do Kwon aims to fork LUNA’s blockchain and now he tries to revive it after the de-pegging of the UST Stablecoin which crashed to fractions of a penny in a week. His recent proposal debated a plan to redistribute the tokens and abandon the stablecoin and split the blockchain into two in a similar manner to Ethereum Classic.

The proposal titled “Terra Ecosystem Revival Plan” allows the blockchain purists to keep the collapsed blockchain that will be called Terra Classic and the token will be LUNA Classic. The new chain will airdrop 1 billion Luna tokens between developers and UST holders and those that staked or held LUNA or other derivative projects before the price of the stablecoin de-pegged. The redistribution will include schedules and token lockups for most of the ocean to avoid a steep price decline as Terra determines how to go ahead without UST as its main point of focus.

Kwon’s latest proposal shares elements of the first plan and there will be no UST stablecoin. Kwon shared the plan which came due to competing interests from varied stakeholders and with no consumption to be had, the developers and holders can choose to start fresh or to stick with the collapsed chain that remains paused as the community decides how to go furhter. UST stablecoin is an undercollateralized asset that is supposed to keep parity with the US dollar in a relationship with LUNA. The price of the coin is kept in check via a token destruction method and arbitrage and if the price of UST falls below $1, the traders can buy it up and swap it for a dollar worth of luna.

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The system worked while LUNA’s price was going up and made it a valuable asset to hold but then the terra lending protocol called Anmchor started lowering interest rates from a high 20% with less of a value proposition for luna. The traders cashed out and fled and propelled both UST and LUNA into a death spiral.

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