Modified Terra Recovery Plan Would Reduce Allocation For Post-Attack UST Holders

After a grueling two weeks for the Terra community, the team behind the project has announced revisions to its proposed relaunch plan for...



After a grueling two weeks for the Terra community, the team behind the project has announced revisions to its proposed relaunch plan for Terra (LUNA) and TerraUSD (UST).

In a Tweet, Terra shared three major revisions to the proposed Terra recovery and redistribution plan. These include increasing genesis liquidity, introducing a new liquidity profile for LUNA holders before the attack, and decreasing distribution to UST holders after the attack.

The announcement noted that the UST (aUST) anchor holders before the attack, the LUNA holders after the attack, and the initial liquidity parameters of the UST holders after the attack are changed. The change will increase from 15% to 30%, and according to Terra, this could “mitigate future inflationary pressures” and increase the supply of tokens at launch.

Other than that, wallets that hold less than 10,000 LUNA will get the same liquidity as the aforementioned groups. In addition, 70% of their LUNA will be acquired in more than two years, with a cliff of six months. Terra said it believes this new liquidity profile will ensure that smaller token holders will have similar initial liquidity.

Finally, the allocation for post-attack UST holders decreased from 20% to 15%. According to Terra, this “dpeg-related allocation is on par with the initial stakeholder allocation (before the $LUNA attack)”. The 5% will be transferred to the community pool.

Related: Terra Fallout: Stablegains Lawsuit, Hashed Loses Billions, Finder Is Wrong and More

The aftermath of the UST’s collapse gave the community reason to doubt the future of algorithmic stablecoins. According to Assistant University Professor Ryan Clements, purely algorithmic stablecoins are “inherently fragile” and rely on many assumptions, which are neither certain nor guaranteed, to be stable.

Meanwhile, while some are using the UST collapse to attack the entire industry, some have tried to defend the crypto. In an interview with Cointelegraph, Huobi Global co-founder Jun Du said that “a short-term bad apple will not affect [the] long-term demand for crypto.”