After 7 days of voting, the proposal to revive the Terra ecosystem with a new Terra Luna token dubbed Luna 2.0 was officially approved on the evening of May 25. Approximately 306 million/368 million governance tokens were used by holders to participate in voting.
Data from Terra Station showed that 65.50% of all voters support the proposal. More than 20% of voters abstained and 13.20% of the votes strongly opposed the proposal with a “veto.” After this proposal was approved, the Terra development team said they would launch a new Terra blockchain on May 27. On Reddit, Changpeng Zhao, CEO of Binance exchange said they will support users to convert to LUNA 2.0 in the near future.
According to Korea Herald, Do Kwon – Co-founder of TerraForm Labs contacted many South Korean crypto exchanges to relist LUNA 2.0. However, these platforms still want to maintain their distance from Terra after the LUNA’s crash. Because according to the smart contract, if you decide to stop staking and withdraw your tokens, there is a 21-day waiting period until you will receive them. Therefore, when LUNA loses its value, they hold many tokens but cannot sell.
Proposal to revive Terra by paying LUNA 2.0 tokens will create an opportunity for validators to dump the amount of tokens they are holding at a better price. The distribution model for the new LUNA tokens includes 30% for the community pool, 35% for LUNA holders before the crash of the ecosystem, and 10% for pre-crash Anchor-staked UST (aUST) holders, 10% for post-crash LUNA holders, and 15% for post-crash UST holders.
However, retail investors are not satisfied with Do Kwon’s proposal because most of LUNA 2.0 will be distributed to whales who are holding a large amount of LUNA, UST. Meanwhile, hundreds of thousands of retail investors will suffer because of the deep drop in token prices.
On May 17, an account named morpheus9 created a vote on the LUNA revival plan on the TerraLabs forum. The result showed that 92% of investors are against Terra’s Luna hard fork. Retail traders expressed dissatisfaction with this plan of Do Kwon.
Vitalik Buterin, co-founder of Ethereum and Changpeng Zhao, CEO of Binance are all in favor of compensating small investors but Do Kwon is still determined to carry out the “hard fork” plan.
On May 20, Do Kwon made some changes in the distribution of LUNA 2.0 after facing significant controversy. Accordingly, investors who held over 10,000 LUNA tokens before UST’s implosion will receive the new tokens periodically, to prevent immediate selling. Over 30% of their tokens would be unlocked initially, and the remaining 70% would be released over two years. New tokens will be distributed after six months to such holders. Wallets with more than 1 million LUNA or UST prior to UST’s depegging from the U.S. dollar would have to wait more than a year before receiving any tokens, with a four-year vesting period thereafter.
In addition, Terra will maintain the current network and change its name to Terra Classic. All LUNA in circulation will be converted into LUNA Classic (LUNC). This means that the old network’s LUNA and UST tokens are still supported for trading despite future upgrades. The proposal also includes the removal of Terra’s algorithmic stablecoin UST, among other items.
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