The founder of collapsed stablecoin TerraUSD wants to build another blockchain from its network's ashes
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- TerraUSD founder Do Kwon proposed a plan to revive the wrecked Terra ecosystem late Monday.
- He suggested hard forking the Terra blockchain and abandoning the failed UST stablecoin.
- Kwon said the new chain would be dubbed "Terra" while the old chain would be "Terra Classic."
TerraUSD founder Do Kwon has put forward a new "revival plan" for the Terra ecosystem, after the collapse of its stablecoin and sister token luna fed a wider cryptocurrency meltdown last week.
The crypto entrepreneur called for a hard fork of the existing Terra blockchain, which would involve ditching the failed terraUSD stablecoin altogether and creating a new community-owned chain.
He suggested in a blog post Monday that the old chain could be dubbed "Terra Classic" with its token renamed "luna classic" (LUNC). The new chain would be known as Terra and its native token would take on the luna (LUNA) name.
"$UST peg failure is Terra's DAO hack moment — a chance to rise up anew from the ashes," Kwon said in the post, in apparent reference to the hard fork of ethereum after the 2016 hack of crypto collective The DAO.
"The Terra ecosystem and its community are worth preserving," the Terraform Labs co-founder added.
The terraUSD (UST) and luna projects run by Terraform Labs crumbled and helped spur crypto market bloodbath last week over concerns about a UST death spiral could hit other coins. The algorithmic stablecoin lost its peg to the dollar and tumbled as low as $0.30 on Wednesday, while luna sank more than 97%.
Under the proposal, people who hold luna on the existing Classic chain will get an airdrop of the new luna token, as will the blockchain's developers and UST holders. Terraform Labs won't receive any of the 1 billion new tokens distributed, as its wallet will be removed.
The airdrop will go ahead by May 27, depending on whether the proposal gets the green light in a vote expected to begin Wednesday.
Kwon reiterated that he is looking to "compensate remaining users" of UST following the stablecoin's crash. In a series of tweets Monday, the Luna Foundation Guard, headed by Kwon, said the non-profit organization is "looking to use its remaining assets to compensate remaining users of $UST, smallest holders first."
The proposal builds on an earlier revival plan floated by Kwon on Friday. In response to the discussion around that, Binance CEO Changpeng Zhao forking the blockchain wouldn't work.
"Personal opinion. NFA. Forking does not give the new fork any value. That's wishful thinking," Zhao said in a weekend tweet.
The collapse of the Terra ecosystem could spur lawmakers to hasten the development of regulation around cryptocurrencies, Circle CEO Jeremy Allaire said Monday. The Securities and Exchange Commission has called the crypto space the "Wild West" for its lack of protection for consumers and prevalent scams.
Luna sank almost 9% on the day to reach $0.0001907 on Tuesday morning, according to CoinMarketCap data. It has plunged almost 100% from its all-time high of $119.18 hit on April 5, but is off its all-time low of $0.000000999967. UST was trading further below its dollar peg, down 2.4% to $0.1243.
The collapse of the crypto market came against the backdrop of increasing investor angst over high-risk assets as the Federal Reserve tightens its grip on its ultra-easy money policy by hiking interest rates to combat red-hot inflation.