Do Kwon has put forth a proposal for a plan on how to proceed. In short, he proposes to try and save the Terra Community by launching a new token. Then reimbursing some of the older of the now basically worthless UST and LUNA tokens in this new Token. If you want to read about this proposal in more detail, you can do some here:
Do Kwon propose a way to save LUNA
A new proposal emerges
But Do Kwon's plan of action is not by any stretch the only way to try and save what can be saved from this whole mess. An alternative plan has slowly started to emerge from the Terra Community. And it has begun to gain some momentum.
The proposal has taken a somewhat novel approach to how to try and make people whole again. What normally would happen in situations like this, is the people who have the biggest stakes in the pie gets to eat first. Just look at what Cooinbase said would happen in case they went bankrupt. This would then leave the people with small stakes out in the cold, with no pie at all.
What this proposal proposes to do is the opposite. Is saying that the remaining funds of the LUNA Guard, just over 1,5 Billion in reserve. Thes funds should be liquidated. And used to make the UST holders from before the de-pegging event whole. The reason for doing it this way is threefold. The first and probably most important one is that in doing this, 99,6% of Anchor wallets would be able to regain their money. In practice, this means that everyone who held around 1 million or less UST could get their money back. The second reason would be that this would build up the most trust in the community, the actual users of the Blockchain.
Can that really be true? 99,6% of all Anchor wallets could be made whole again. Well yes. This is because the top 1000 UST holders at Anchor together held 82% of all the UST.
The third reason for doing it this way is, they argue, that it is the smallholders who are impacted the most by this loss. If you are "poor", for the lack of a better word. And you loos $10000 dollars, this negatively impacts you way more than if a super-rich person would lose $10M. They would still be super rich even without the $10M. But a "poor" person might have their lives completely ruined by losing their lives savings.
But what about the major UST holders and all the LUNA holders?
This would then leave all the major holders of UST and LUNA out in the cold. But here we can apply Do Kwon's idea. We could reimburse them proportionate to holdings of UST or LUNA with the new token.
This seems, to me at least, like a very good solution. Abd by far the best proposal I have here regarding how to try and rebuild what can be out of this whole mess. This would mean that the vast majority of network users would be made whole. And in the same way, probably rebuilding as much trust in the network as possible.
And if we compare the two proposals the main difference is that with this new proposal some people actually get their money back. Compared to Do Kwon´s idea where everyone instead only would get this new token as compensation.
Building up the trust in the community
This I see as the biggest and most important thing to do if anything is to be saved from the Terra Community. If there is no trust there is no community. And one big part of this is transparency. Being open with the whole process. And I personally do not feel that Do Kwon and Terra are doing this to the extent they can, and should.
Why is there no mention of this roughly $1,5 billion that is still available to Terra? At the very least I think it should have been used to provide liquidity for the new token. But instead, it is not even mentioned at all.
Another thing that needs to happen is Terra needs to disclose how the massive holdings of Bitcoins actually were used. Do Kwon has tweeted that they plan to do so. Bus as of the moment of writing. No details had been released by either Terra or Do Kwon.
The best we have so far is that the blockchain analytics firm Elliptic has undertaken to track the movement of these Bitcoins. But they have only been able to follow them into Gemini and Binance. You can read more about this in the Coindesk article here. In order for the trust to at least have a fighting chance, this information needs to be made publicly available, as promised.
And the 1,5 billion in remaining funds needs to not be allowed to just magically dissapear.
If you would like to review the community proposal in more detail Max Maher has made a video where he goes over it in greater detail than I have been able to do here.
What is your thought on these plans? Which one do you prefer? Do you even think it is possible to save anything from this whole mess? Please share your thoughts on this and anything else in the comments down below.
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