Collapsed ‘stablecoin’ terra must be rebooted in an effort to recover losses
Terra, the “algorithmic stablecoin” project whose collapse this month led to a widespread crash of the entire cryptocurrency sector, is being rebooted as “terra 2.0” in a last-ditch effort to recover investor losses.
However, the new cryptocurrency, which will be launched on Friday morning, will no longer take any effort to peg its value to the US dollar, in an effort to avoid the “death spiral” that destroyed the original iteration. The plans were approved by a vote of terra investors, with 65% in favor.
Instead, new tokens will be distributed to a wide selection of users who were involved in “terra classic” before and after the crash.
The bulk of the tokens will be given to people who owned the terra stablecoin or its floating sister currency, Luna, as of May 7, shortly before terra broke its peg with the US dollar and the values of both currencies rose to zero. On Wednesday, the value of terra had fallen from $1 to nine cents.
The primary purpose of the reboot is to ensure that those users, who lost the most money during the crash, have a chance at redemption.
Another quarter of the tokens will be given to users who have Terra or Luna on Friday morning, in an effort to ensure they are rewarded for their loyalty, if they held it during the crash, or for providing exit credentials. capital to those trying to sell.
Terra’s founder, charismatic yet controversial South Korean entrepreneur Do Kwon, said the motivation for the currency’s reboot was to support the wider platform built around terra.
“While UST [the terra stablecoin] has been the central story of terra’s growth story for the past year, the distribution of UST has led to the development of one of the strongest developer ecosystems in crypto,” Kwon said.
“The terra ecosystem and its community are worth preserving. Terra’s app ecosystem contains hundreds of developers working on everything from defi to replaceable labor markets, state-of-the-art infrastructure and community experience. Though saddened, [terra] has strong brand recognition and a name that almost everyone in the world will have heard of.”
But the relaunch does not guarantee that anyone will actually see a return. If ailing investors, like the Ukrainian man who lost all of his $10,000 savings in the crash, want to get some of their wealth back, others will have to be willing to buy into the rebooted currency