Terra Attempts Resurrection
Terra’s new blockchain is now operational.
Terraform Labs announced yesterday on Twitter that the new network has begun producing blocks. It went live yesterday at 06:00 UTC, with a token airdrop for existing LUNA and UST holders.
1/ Block 1 of the brand new Terra blockchain (with a chain_id of “Phoenix-1”) has officially been produced at 06:00 AM UTC on May 28th, 2022!
Congratulations to the #LUNAtic community on this expeditious feat of collaboration 🎉
May 28, 2022
The tweet said that: “Block 1 of the brand new Terra blockchain (with a chain_id of “Phoenix-1”) has officially been produced at 06:00 AM UTC on May 28, 2022! Congratulations to the #LUNAtic community on this expeditious feat of collaboration. “
The new blockchain is an attempt to save what’s left of the Terra community following the blockchain’s spectacular collapse earlier this month. On May 8, Terra’s algorithmic stablecoin UST de-pegged from the dollar, plunging its related token LUNA into a death spiral.
Within days, UST had plummeted to a few pennies on the dollar, and LUNA had nearly vanished. The collapse wiped out approximately $40 billion in value and instilled mayhem across the industry. This caused fears that stablecoins and other significant assets would fall in value.
On May 16, Do Kwon, the outspoken co-founder and CEO of Terraform Labs, advocated forking Terra, arguing that “the Terra environment and community are worth protecting.”
He outlined a strategy for reviving the network without using an algorithmic stablecoin, proposing the release of a new token to make Terra investors whole. The concept was first met with broad skepticism in the community, but after more than a dozen significant validators announced their support the next day, the initiative’s prospects brightened dramatically.
How much will previous holders get?
Along with the blockchain rollout, a new LUNA token airdrop went live this morning. According to the plan, prior LUNA, UST, and aUST holders will receive 70% of the new token allocation (aUST represented UST tokens placed in Anchor Protocol, Terra’s flagship DeFi protocol that guaranteed investors 20% payouts on their stablecoins). Terraform Labs did not get any tokens as a result of the drop.
The airdrop can be claimed soon after the launch through centralized exchanges or Terra’s website. Several major cryptocurrency exchanges, including Binance, Huobi, Kraken, Bitfinex, Bitrue, Kucoin, and Bybit, have announced that Terra backers can obtain their tokens through their platforms.
Not all airdropped tokens can be claimed right away, though. Initially, just 30 % of the initial supply can be claimed. The remaining 70% of the airdrop has been staked directly with validators, which will vest in as little as two years.
Terra’s community pool, an on-chain reserve fund, will receive 30 % (300 million) of LUNA tokens on the Terra 2.0 chain.
Terra governance manages the community pool, which supports development projects. According to an earlier release, 30 million of the entire pool would be allocated to developers elected to stay and rebuild the new Terra chain.
At press time, LUNA was trading at roughly $5.53 (70.85% down from yesterday, according to CoinMarketCap data. The original LUNA and UST tokens have been renamed LUNA Classic and UST Classic, respectively, and the original Terra blockchain and LUNA tokens have been renamed Terra Classic.
Kwon is dealing with Korean authorities.
The new blockchain launch is a bold step for Kwon, who is now dealing with escalating legal issues. Several investors are reportedly planning to file fraud charges against Kwon, who may also face criminal charges.
According to local reports, South Korean authorities are investigating Kwon for possibly running a Ponzi scheme. He was also allegedly fined $78 million for tax evasion by the country’s National Tax Service. Since Terra’s extinction, Kwon has been unusually cautious in his online communications, but he has stated that Terraform Labs has no tax issues in South Korea.
