Terra Has a Recovery Plan With Community Feedback

The last couple of weeks has been a tumultuous time for the crypto market as Terra lost its peg and the ecosystem collapsed in days. Terra’s native token LUNA was felled, and the value virtually reached $0. The de-pegging event’s impact was felt far beyond Terra, as the entire market lost around $100 million of its TVL and made drastic changes to the market rankings.

After the fall, Terra dropped to close to the twentieth position in terms of TVL from the previously held third position. As per the data, Terra lost about 99% percent of its $30 billion TVL and currently has about only $300 million remaining.

The Terra team has bounced back earlier than expected with its new revival plans for the ecosystem. According to a post shared by Do Kwon, CEO of TerraForm Labs, the revival plans involve launching a new network to accommodate the community of investors, developers, and builders from the current network.

After the new Terra chain launch, the current network will be renamed Terra Classic with LUNA tokens. Once online, the network will airdrop new LUNA tokens among LUNA, stakers, LUNA holders, UST holders, and developers on the new chain.

According to the initial revival plan, the network was to allocate the 1 billion new LUNA tokens among users who invested in LUNA and UST before and during the de-pegging. So, the network was to allocate 40% each for the pre-fall LUNA holders and the pro-rata UST holders during the chain halt. The remaining 20% of the supply was split equally between LUNA holders who offered stability during the fall and the community pool.

However, the team has amended the initial terms of the plan based on the feedback received from the Terra community. The new outline for token distribution has increased the community pool share from 10% to 30%. A portion of these tokens will be staked for governance, and around 10% will be offered to developers for their contribution.

The LUNA holders from before the attack will receive about 35% of the supply. Wallets with less than 10k LUNA will get 30% during the launch, and the remaining 70% percent will be settled over two years with a 6-month cliff. The vesting period for wallets with up to 1 million LUNA is two years with a cliff of 1 year. For those with more than a million LUNA, the vesting may take up to 4 years with a 1-year cliff period.

Aust holders from before the chain halt will get 10% of the supply, and it comes with a 500k whale cap. Post-attack, LUNA and UST will get 10% and 15% of the supply. All these wallets will be rewarded with 30% of their holding at the genesis, and 70% will be vested in 2 years with a 6-month cliff.

This outline was created to support smallholders who account for 99.81% of the LUNA wallets. However, this impressive number represents only 6.45% of the entire LUNA supply. According to Do Kwon, the outline was drawn to preserve the ecosystem and the community, which is essential for Terra’s growth in the future.


Another important aspect of this revival plan is the transfer of ownership from Terraform Labs to the community. The community will be allowed to form its very own steering committee through multi-sig protocols. According to the report shared after completing multiple steps, the new chain is likely to go live on the 27th of May.

Terra’s revival plan is developed with the community and the band of developers in mind. Although there has been a considerable dent in the network’s reputation, we can be sure that it has the necessary tools to recover from it. Moreover, the network is also trying to earn back the trust by actively involving the community in more of their development operations.

Roxanne Williams

Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.

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