On May 15, Buterin expressed support for the proposal on Twitter, saying that the focus should be on the small investor who needs the money, before adding that the whale holders should bear the loss:
“Coordinated sympathy and relief for the average UST smallholder who got told something dumb about ‘20% interest rates on the US dollar’ by an influencer, personal responsibility and [sorry for your loss] SFYL for the wealthy.”
Buterin, c, believes that any suggested payment strategy for the ailing ‘terra project should favour small holders, not the whales.’
While the Ethereum founder did not advocate for regulation, he did mention that potential safeguards like bank deposit insurance may be valuable in certain situations.
Strongly support this. Coordinated sympathy and relief for the average UST smallholder who got told something dumb about "20% interest rates on the US dollar" by an influencer, personal responsibility and SFYL for the wealthy. https://t.co/YfNlpvAizg
— vitalik.eth (@VitalikButerin) May 14, 2022
The Terra eco-system went into a death spiral on May 9, resulting in Terra (LUNA) losing its US dollar peg and the TerraUSD (UST) stablecoin losing its US dollar peg, which was valued at $0.16. With huge losses suffered by LUNA and UST investors, the community is now looking for ways to restore the ecosystem and maybe give financial aid to the many people who have been hurt economically.
It’s uncertain at this point if the project will be able to recover or whether it will attempt a brief rebound to recoup investor losses, however tough that may be. It’s also worth noting that the proposal linked to Buterin’s statements has been amended this week, and it now considers paying out all users up to a $50,000 per-wallet maximum.
Another proposal floating around the internet is to create a “TERRA 2” hard fork for the Terra blockchain, as well as a liquidity pool to restore UST back to its peg.
Changpeng Zhao, the founder and CEO of Binance, criticised this concept of Terra on Twitter over the weekend. He stated that “forking does not give the new fork any value. That’s wishful thinking.”
Personal opinion. NFA.
This won't work.
– forking does not give the new fork any value. That's wishful thinking.
– one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).Where is all the BTC that was supposed to be used as reserves? https://t.co/9pvLOTlCYf
— CZ 🔶 Binance (@cz_binance) May 14, 2022
The Luna Foundation Guard owned about $2.7 billion in Bitcoin prior to the LUNA and UST crashes (BTC). CZ questioned the pool concept for rebuilding UST, stating “where is all the BTC that was supposed to be used as reserves?”
Do Kwon, the creator of Terraform Labs, has suggested a reorganisation of the Terra blockchain in order to reset “network ownership” and give 1 billion LUNA tokens to the community.
Popular personalities in the crypto world, such as Dogecoin (DOGE) co-founder Billy Markus, have criticised Kwon’s planned “Terra Ecosystem Revival Plan,” calling for him to quit the industry and stating:
“If they want to pay off the victims of their dumbass failed protocol, instead of using new money from new victims, they should use the money they already funnelled from investors to pay them back.”
