Do Kwon plans a rescue mission for LUNA by way of forking the current Terra blockchain. There was substantial excitement about this on social media, and LUNA even managed to rise to as much as $0.00022 on Monday evening, 16th May. However, during the early hours of Asian trading it shed around 22% to sit at just over $0.00017. The data shows that some $2.1 billion worth of the tokens were traded over the past 24 hours alone.
Even worse for some LUNA holders, the token is now down more than 99% since its April highs of nearly $120. The dramatic fall came as excess LUNA were put into circulation last week to prevent the collapse of terraUSD (UST), the Terra ecosystem stablecoin pegged to the US dollar, which we’ve all heard plenty about.
Do Kwon’s proposal on 16th May was to fork Terra to a new chain that would entirely cut out its failed UST product and instead focus on decentralized finance (DeFi) applications building on Terra. Calling the $40 billion implosion “a chance to rise up anew from the ashes,” Kwon said “the ecosystem and its community are worth preserving” as he pitched the second take revival plan as a “living document.”
In his plan, holders of LUNA on the “Classic” chain (the existing chain) would receive an airdrop of the new chain’s token under the plan. The old chain will continue to operate using the newly renamed Luna Classic (LUNC) token.
This is the second time Do Kwon has suggested a plan, although the latest one is less sketchy than last week’s. Compared to the earlier plan, the newer one places a larger percentage of the forked chain’s initial token distribution (25% versus 10%) into a “Community Pool” responsible for funding future development. The new plan also gives 5% of the tokens to “essential developers” – a group not mentioned in the original proposal. Indeed, the vast majority of new LUNA tokens would go to those who lost billions of dollars from last week’s UST collapse. The plan also indicated that smaller holders would get their full allocations faster than whales, and Terraform Labs would get nothing under the deal.
Despite LUNA’s and UST’s crash last week, some market observers remain upbeat on the longer-term outlook of algorithmic stablecoins. Brian Gallagher, co-founder of Partisia Blockchain, said on Telegram, “It is still the earliest days of algorithmic stablecoins. here will be many failures along the way to hold the peg, as they’re mostly in the experimental phase. We have to accept the failures along the path.”
Not everyone agrees with that. Billionaire and Pershing Square Capital founder Bill Ackman commented, “Schemes like Luna threaten the entire crypto ecosystem. The crypto industry should self-regulate away other crypto projects with no underlying business models before crippling regulation shuts down the good and the bad.”