Buterin said that Terra should safeguard the smallholders and not the whales
To help the typical UST smallholder who was enticed by promises of large stablecoin returns by crypto influencers, Vitalik Buterin has asked for relief.
Co-creator of the Ethereum virtual currency Vitalik Buterin feels the Terra project should prioritise small investors in any suggested compensation scheme.
According to reports, the Terra ecosystem collapsed May 9 resulting in a 100 percent drop in Terra (LUNA) and a loss of its USD peg for the TerraUSD (UST) stablecoin (now trading at $0.16).
Rebuilding the ecosystem is currently the focus of the community, which is searching for methods to help those who lost money as a result of the collapse of LUNA and UST, as well.
It is possible to “greatly enhance overall morale and mood” by initially repaying the original deposits (not yields) of small UST holders, and then sorting out creditors and bigger investors afterwards, as long as the UST currency peg is finally stable.” Between $1 billion and $1.5 billion are expected to be paid out.
On Sunda, Buterin tweeted his support for the concept, emphasising that the emphasis should be on the smaller shareholder who needs the money, before going a step further and proposing that the whale holders should bear the losses:
“Coordinated pity and relief for the typical UST smallholder who was misinformed by an influencer about ‘20% interest rates on the US $,’ as well as individual accountability and [sorry for your loss] SFYL for the rich.”
While the co-founder of Ethereum didn’t openly advocate for regulation, he did point out that prospective coverages like bank deposit insurance may be helpful in certain situations.
An unrelated topic is Singapore’s labour laws. Stronger regulation for low-wage workers and a more “do it yourself” attitude for the wealthy are two possible solutions. “I think hybrid formulae like these are excellent,” he remarked.
If the project is unable to reconstruct, or if it aims to recuperate investment losses, however tough that may be, it is now unclear. Over the last week, the proposal pertaining to Buterin’s statements has been revised, and it now considers a $50,000 per wallet limit as a maximum payout for all users.
TERRA 2, a hard fork update to Terra’s blockchain, is also being discussed online, as is the creation of a liquidity pool to restore UST to its peg.
“Forking does not offer the new fork any value,” Binance founder and CEO Changpeng Zhao tweeted over the weekend. “That’s only a fantasy.”
Pre-crash, the Luna Foundation Guard had $2.7 billion in Bitcoin on its hands (BTC). Regarding the idea of a UST rebuilding pool, CZ said, “Where is all the BTC that was meant to be utilised as reserves?”
Founder Do Kwon of Terraform Labs has suggested a rebuilding of the Terra blockchain to reset “network ownership” and give 1 billion LUNA tokens to the Terra community.
A number of prominent members in the crypto world, including Dogecoin (DOGE) co-founder Billy Markus, have strongly criticised Kwon’s planned “Terra Ecosystem Revival Plan.”
They should utilise the money they have channelled from investors to pay back the victims of their moronic failed process, rather than utilising more money from new victims.”