What you need to know about Terra revival plan

21 May 2022 News

In a few more days, the proposal to revive Terra will be passed. The details on how the new Terra blockchain will airdrop it’s token is described here, by none other than Do Kwon. Everyone continues to propose, comment and ask questions. It is chaotic, so here are some information you should know.

Technically not a fork

Terra V2 is not a hard fork, unlike Ethereum from Ethereum Classic. Terra V2 will start with a clean slate, without previous history. What is happening is simply running a new blockchain with all the technology and ecosystem developers, without UST.

They will airdop new LUNA to the old LUNA and old UST holders.

The Plan

The token distribution is wildly discussed since every bag holder has their own bias; ie. UST holders will argue they should make whole as this is a promised “savings protocol” and should not bear risk like LUNA.

This is what TFL/Do Kwon proposed:

  • Community pool: 30%
  • Pre-attack LUNA holders: 35%
  • Pre-attack aUST holders: 10%
  • Post-attack LUNA holders: 10%
  • Post-attack UST holders: 15%

Clearly they allocated highest to pre-attack LUNA holders with 35%, as that will benefit themselves/their friends/VC.

Lack of transparency

It is hard to discuss without them disclosing more details on how they defend the peg, and more details on the attack.

Callisto Network analyzed and warned:

The lack of consensus within the community & dev team is what caused the split in the project — not the proposed solution itself. It is important to investigate alternative solutions and handle a proper PUBLIC discussion of different options.

Proposal to burn will NOT happen

A lot of voices oppose the new V2, and instead want LUNA to burn the supply (thus push up the price).

This is rather naive as there is no capital to buy & burn the LUNA.

And they won’t want to benefit those speculators, who bought it at rock bottom, hoping that it will bump up 1000x.

Calculate your share of new LUNA

You can use this calculator to estimate your airdrop.

For example: If I have 10,000 aUST, I will have total 258 LUNA (after 2.5 year vesting). If that is $10,000 vested, then my break even price of LUNA will be $38. Since there will be 1B LUNA total supply, that will mean a market cap of $38B – possible but much much harder.

What about CEX (exchange)?

A lot of retail users ask what will happen to LUNA and UST held on exchanges such as FTX and Binance.

They will be taken care of, but it is up to the exchanges to implement the airdrop to their users. Terra has a migration guide for exchanges.

As for warpped tokens on other chains eg. Solana, they should wormhole back to Terra before the snapshot on block 7790000, 2022.05.27 03:59:51+08:00.

Other protocols on Terra also unlocked the UST, and users should withdraw them back to their wallet.

It is preferred to hold the LUNA & UST in your wallet before the snapshot. If not, exchange/protocols/chain has the responsibility to distribute the airdrops, which you never know if they will do or when they will do.

Community Chaos

Lastly, Terra is famous for the development community – open, vocal and collaborative. But from this event, you will see the chaos within the community, especially when retail users joined to voice out their unhappiness.

Community is good, but the chaos is hard to manage.