Ball of fire, with the text asking if Luna can rise from the embers like a phoenix?

Do Kwon propose a way to save LUNA

By Patch | Things of note and other interesting stuff | 14 May 2022

On May 14th at 12:15 AM. Do Kwon, the founder, and CEO of Singapore-based Terraform Labs. The company behind the Stablecoin UST and the Token Luna. Both of who have had one of the worst crashes in crypto history over the last few days. Just in case you have missed it. =) He tweeted a series of tweets on his account @stablekwon, 6 in all, where Do Kwon proposes a way to save Luna.

How can Luna be saved, and can it be?

In the series of tweets Do Kwon proposes a plan, a plan that he thinks will have a good chance to save Luna and Terraform Labs. He recognizes that the damage done to UST, the algorithmic Stablecoin, is too great and irreversible at this point. So even if UST would return to the $1 peg, the damage done to its trust is so great that it is irreparable.

While UST has been the central narrative of Terra’s growth story over the last year, the Terra ecosystem and its community is what is worth preserving. -Do Kwon

The parts Do Kwon instead proposes to try and save. Because what he sees as a value and worth preserving, is the Terra ecosystem and its community. In his proposal, found as a link in tweet #5, Do Kwon proposes a reconstitution of the Terra Blockchain. A reset if you will. An effect of Luna being paired with the UST was, as the UST fell. The minting of new Luna tokens escalated. At one point the number of new Luna tokens minted was close to 24 billion in a day.

The reconstitution proposed by Do Kwon would reset the number of Luna tokens back to 1 billion. The 1 billion Luna tokens would then be distributed back to the community according to the following model:

400M (40%) to Luna holders before the depegging event (last $1 tick before the depeg on Binance should be reasonable), bLuna, LunaX and Luna held in contracts should also be recipients, minus the Terraform Labs account at terra1dp0taj85ruc299rkdvzp4z5pfg6z6swaed74e6. The new chain should be community owned. Preserving decent ownership of the network in its strongest believers and builders is important.
400M (40%) to UST holders pro-rata at the time of the new network upgrade. UST holders need to be made whole as much as possible
100M (10%) to Luna holders at the final moment of the chain halt – last minute marginal luna buyers should be compensated for their role in attempting to provide stability for the network
100M (10%) to the Community Pool to fund future development.
All Luna besides the third tranche should be staked at the network genesis state.
The network should incentivize its security with a reasonable inflation rate, say 7%, as fees will no longer be enough to pay for security without the swap fees.

Why do it in this way?

Do Kwon then goes on and talks about his reasoning behind doing it like this. The main reason he mentions is that the UST holders were holding the debt of the ecosystem. So they deserve to be compensated for holding these tokens. I find it really interesting that Do Kwon himself refers to the UST as a token. Do this imply that he never saw it as a Stablecoin to begin with?

Another reason Do Kwon talked about is that he believes that the new Blockchain needs to be "community owned". This would mark a big change vs the average new project in the DeFi space. There instead the trend is for the founders to retain a large portion of the tokens. And so was Luna's original tokenomics as well. There Terraform Labs would hold 26% of the initial tokens. 20% were allocated to employees and contributors. And 20% also going to the "Terra Alliance". Only 26% of the initial number of tokens were destined for backers.

If this change is a fundamental shift in how Do Kwons views how a Blockchain should work. Or nearly the only way he can think of to try and save his creation I do not know. What I do know is that a vast number of token owners, a decentralized ownership if you will, tends to lead to stability. But this also means that there is less volatility in the token. AS no one big actor can either put money into the ecosystem or remove it to greatly influence its value.

But what do you think, are Luna and the Terra ecosystem worth saving? And can it be saved? How would you try and save Luna if you were given the opportunity? Please share your thoughts on this and anything else in the comments down below.

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