Golden Observation｜Hot Proposals on the "Terra Ecological Revival Plan"

After a series of plummets and death spirals, the Terra revival plan has been put on the agenda, and opinions vary.

On May 14, Terraform Labs co-founder Do Kwon presented a proposal to preserve the Terra ecosystem. His proposal, which comes in response to validators discussing the possibility of forking the Terra chain, 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 allocated to LUNA and UST holders, as well as community pools to fund future development. Specifically, 40% of the newly allocated tokens will flow to LUNA holders prior to the unpeg event; 40% will be distributed pro rata 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" ( Twitter named @wassielawyer ) proposed "graded repayment: use LFG funds to return 1:1 USDC to all UST holders, each wallet does not exceed a certain cap, favoring small wallets” proposal. Specifically: 1. Only initial deposits made into Anchor are eligible for refunds, not earnings. 2. All forms of UST on Terra will be included in the first batch of refunds, including UST pledged in mining pools such as LP and Osmosis. 3. Not only compensate small retail user wallets, but pay all wallets, including whale wallets, and each address pays up to a set upper limit.

According to FatMan, giving priority to small traders when compensating has three benefits: Reduced emotional impact: Given that small holders make up the vast majority of the community in number, 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 resolution can be discussed and executed in a tight-knit team ;Most efficient use of funds during the transition: using only $1 billion or $1.5 billion would make most affected users 100% full in volume, rather than keeping all users 10-20% full.

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-favoring-small-wallets/6471

Vitalik Buterin, the founder of Ethereum, agreed with the proposal that the Terra Fund should give priority to compensating UST small holders.

A Terra community user named CosmicWish proposed that the Terra ecosystem contains software systems worth millions of dollars that provide significant value to the UST and LUNA cryptocurrencies. Trust in UST and LUNA can be restored with these valuable systems. Specifically: The Terra internal team needed to research and outline funding guidelines to raise funds. Fundraising ideas include: 1. Every build system on the terra ecosystem [hopes] generates funding from running the Terra ecosystem, so each system needs to outline how much it can/willing to provide. 2. Other closely related institutions, etc. channels.

Once the funds raised exceed the UST amount required to restore the peg, the external transaction of UST will be stopped, and the raised funds will be used 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 token.

After resuming the hook, Terra will need to make sure it stays hooked:

• Limit the amount a wallet can hold/transfer. Transactions exceeding this selected amount will be rejected. Users can request an increase in their wallet transaction limits through public governance voting. A list of publicly available wallets and their adjusted limits is allowed. This would allow Terra and trusted partners to be unrestricted, while restricting external users would not drive the market significantly.

• The UST locked by the fund will generate a % rate of return that is [anchor], which can be distributed to UST holders/wallets who 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 capitalization imbalance between the two is managed. This can be done by incentivizing one holder to switch to another and dynamically increasing/decreasing via UST % yield/LUNA staking rewards.

• Adjusting Mint/Burn market makers to ensure the UST peg stabilizes back to the peg quickly, this will ensure that trust is not lost if the peg is not maintained for long periods of time.

• After a while, Terra and many projects generate income and should allocate a certain percentage as collateral and hold different assets [gold, stocks, stablecoins, other projects, BTC , etc.]. Collateral spread 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-to-peer projects in the CMC 500, came up with "8 steps to save Luna". Specific recommended 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 rate; 4) Set a cap on the interest rate of newly minted UST to increase general utilization and strengthen the organic arbitrage economy, while further reducing the currency velocity; 5) Around stability and staking Strengthen Luna's economy and focus on deflationary mechanisms; 6) Set UST's CAP to 20B UST, this cap 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, and when the collateral is below 1, influence the UST price to start compressing controllably; 8) use all swap fees collected as staking rewards for disaster fund providers , and ensure a smooth transition for the fund to a new collateralization mechanism that basically does the same thing → buy back Luna in case of future inversions.

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 is agreed to be in progress. Ryan Wyatt, CEO of Polygon Studios tweeted that he is working closely with various Terra projects to help them quickly migrate to Polygon, and Polygon will invest funds and resources to deal with these migrations to welcome developers and their respective communities to join the platform .