Rising from the ashes? Do Kwon proposes "Resurgence Plan 2" to save the Terra ecosystem

Terraform Labs CEO Do Kwon has launched a new “revival plan” to save the Terra ecosystem after the collapse of the UST stablecoin last week. His new slogan is: “Terra is more than UST.”

Kwon called the $40 billion implosion "an opportunity to rise from the ashes, and the ecosystem and its communities are worth protecting."

In a Twitter post on Monday, Kwon proposed to fork the Terra chain into a new chain without an algorithmic stablecoin, with the old chain being called Terra Classic (token Luna Classic – LUNC) and the new chain being called Terra (token Luna – LUNA). The decoupling of UST from the dollar undermines the entire ecosystem, including the LUNA token. Under the plan, LUNA holders on the existing chain will receive an airdrop of the new chain’s tokens.

Kwon said the new chain will be "entirely community owned" and new LUNA tokens will be airdropped to LUNC holders, UST holders, and key developers of the Terra Classic blockchain. In addition, Terraform Labs' wallet address terra1dp0taj85ruc299rkdvzp4z5pfg6z6swaed74e6 will be removed from the airdrop whitelist, making Terra a fully community-owned chain. The proposed supply cap for LUNC is 1 billion, with 25% going to the community pool and 5% going to base developers.

The plan is still under consultation with the community, and the specific details may change. The proposal will take effect after token holders vote on it. Kwon promised that the vote will begin on May 18. If passed, the new LUNA blockchain will go live on May 27.

Kwon’s announcement on Monday follows his initial “revitalization plan” he laid out last week. That earlier plan, while light on details, also proposed transferring ownership of Terra to its community.

Compared to the earlier plan, the new plan puts a larger portion of the fork chain’s initial token allocation (25%) into a “community pool” responsible for funding future development. The new plan also provides 5% of tokens to “foundational developers,” a group not mentioned in the original proposal.

The vast majority of new LUNA tokens will go to those who lost billions of dollars in last week’s crash. According to the schedule, smaller holders will receive their full distribution faster than whales or large holders, who may have to wait up to five years.

Earlier today, the Luna Foundation Guard revealed that it had used up the vast majority of its cryptocurrency reserves trying to defend UST’s peg to the U.S. dollar during the market sell-off. As such, it is unlikely that the Terra ecosystem will be able to save itself without the help of outside capital.

Binance CEO Changpeng Zhao said he would support Terra's community but stressed that "they need more transparency," including details about specific on-chain transactions (transaction IDs) for all funds. He pointed out the potential problems of forking Terra, "coin minting and forking do not create value, buybacks and burns are OK, but they require funds."

At the same time, Zhao Changpeng expressed support for the plan to prioritize compensation for small UST holders. The plan believes that if small holders are compensated first, 99.6% of wallets can be fully compensated, which is more conducive to stabilizing community sentiment.