Popular proposals for “Terra Ecological Revival Plan”
After a series of slumps and a death spiral, Terra’s revival plan has been put on the agenda, and there are many opinions.
On May 14, Terraform Labs co-founder Do Kwon presented a proposal to protect the Terra ecosystem. His proposal comes in response to validators discussing the possibility of forking the Terra chain, which involves compensating UST and LUNA holders who were unable to sell their holdings during last week’s price crash.
Do Kwon proposed that validators should reset network ownership to 1 billion tokens distributed to LUNA and UST holders, as well as community mining pools to fund future development. Specifically, 40% of the newly allocated tokens will flow to LUNA holders prior to the unpegging event; 40% will be distributed proportionally to UST holders when the new network is upgraded; 10% will be distributed before the chain ceases operations For LUNA holders, the remaining 10% will be used to develop the mining pool.
On May 14th, a community user named “FatMan” (@wassielawyer on Twitter) proposed “Tiered repayment: 1:1 USDC returned to all UST holders using LFG funds, each wallet does not exceed a certain limit , good for small wallets” proposal. Specifically: 1. Only the initial deposit made to Anchor is eligible for a refund, not a gain. 2. All forms of UST on Terra will count towards the first batch of refunds, including UST staked in mining pools such as LP and Osmosis. 3. Not only compensation for small retail user wallets, but for all wallets, including whale wallets, each address pays up to a set cap.
According to FatMan, prioritizing small traders when it comes to compensation has three benefits: Reduced emotional impact: Given that small holders make up the vast majority of the community in terms of numbers, this will greatly improve overall morale and sentiment as more than 80% of Anchor users Will be integrated; easier to manage residual creditors: once most creditors are settled in one go, residual creditors (institutions and billionaires) will have greater liquidity as settlements can be discussed and executed in a tight-knit team ; Most efficient use of funds during transition: Using only $1 billion or $1.5 billion would make most affected users 100% quantitatively complete, rather than 10-20% complete for all users.
Proposal link: https://agora.terra.money/t/proposal-tiered-repayment-1-1-usdc-refund-to-all-ust-holders-up-to-a-certain-cap-per-wallet -using-lfg-funds-favouring-small-wallets/6471
Ethereum founder Vitalik Buterin agrees that the Terra Fund should give priority to compensating UST smallholders.
A Terra community user named CosmicWish suggested that the Terra ecosystem contains multi-million dollar software systems that provide significant value to the UST and LUNA cryptocurrencies. Utilizing these valuable systems restores trust in UST and LUNA. Specifically: Terra internal teams need to research and outline fundraising guidelines to raise funds. Ideas for raising funds include: 1. Every build system on the terra ecosystem [hopes] to generate funds from the running of the Terra ecosystem, so each system needs to outline how much it can/willing to provide. 2. Other closely related institutions, etc.
Once the raised funds exceed the amount of UST required to restore the peg, stop UST’s external transactions and use the raised funds to purchase UST to restore the peg. This UST should then be locked for a selected period of time to help restore trust in the coin.
After restoring the hook, Terra will need to make sure it stays hooked:
Limit the amount a wallet can hold/transfer. Transactions over this selected amount will be rejected. Users can request to increase their wallet transaction limit through a public governance vote. List of publicly available wallets allowed and their adjusted limits. This would allow Terra and trusted partners to be unrestricted, while restricting external users would not significantly drive the market.
The UST locked by the fund will generate a % yield which is [anchor], which can be distributed to UST holders/wallets that lost funds during the attack. This will incentivize existing holders to return to the terra ecosystem and restore trust.
UST and LUNA will need a system to ensure that the market cap imbalance between the two is managed. This can be done by incentivizing one holder to switch to another and dynamically increase/decrease via UST % yield / LUNA staking rewards.
Adjusting the Mint/Burn market maker to ensure that the UST peg quickly stabilizes back to the peg, this will ensure that trust is not lost if the peg is not maintained for a long time.
Terra and many projects generate income after a while and should allocate a certain percentage as collateral and hold different assets [gold, stocks, stablecoins, other projects, BTC, etc]. Collateral scattered across different assets protects Terra’s trust when certain markets lose value.
Proposal link: https://agora.terra.money/t/proposal-terra-ecosystem-revival/7731
Nikola-HydraChain, the self-proclaimed team behind two other successful peer projects in the CMC 500, came up with “8 steps to save Luna.” Specific suggested actions: 1) Immediately stop new minting or block production and lock all Anchor withdrawals for 14 days (deposits are allowed): 2) Enable tiers on Anchor and tie Anchor earning economy to Luna demand; 3) Establish a disaster repurchase fund to repurchase and burn LUNA at a constant interest rate; 4) Set a cap on the interest rate of newly minted UST to improve general utilization and strengthen the organic arbitrage economy, while further reducing the velocity of currency circulation; 5) Revolve around stability and staking Strengthen Luna’s economy and focus on deflationary mechanisms; 6) Set UST’s CAP to 20B UST, a cap that will make UST deflationary and promote stronger demand for it on a psychological level; 7) Enable dynamic price oracles to monitor the k(LUNA):k(UST) ratio, when collateral falls below 1, influence the UST price to start compression in a controllable manner; 8) Use all swap fees collected as staking rewards to disaster fund providers , and ensure a smooth transition of the fund to the new staking mechanism, which will basically do the same → repurchase Luna in case of a future inversion.
Proposal link: https://agora.terra.money/t/proposal-8-steps-to-save-luna-now-economic-refactoring-proposal-from-industry-professionals/7510
Currently, all proposals are still under discussion. However, the Terra ecological partition plan agreed to be in progress. Polygon Studios CEO Ryan Wyatt tweeted that he is working closely with various Terra projects to help them quickly migrate to Polygon, and that Polygon will invest funds and resources to address these migrations to welcome developers and their respective communities to the platform .