Terra’s cataclysmic meltdown has left an unsightly mark on the portfolios of holders of its tokens. This includes the world’s largest cryptocurrency exchange by trading volume, Binance. CEO Changpeng Zhao said in a tweet today that the exchange’s LUNA stash, which peaked at $1.6 billion at some point, had not been sold.
In the meantime, Terraform Labs CEO Do Kwon has come up with yet another plan to save the Terra ecosystem which he believes is “more than UST”.
Binance Never Sold Its 15 Million LUNA
Binance poured $3 million into the Terra ecosystem in 2018 and received 15 million LUNA tokens in return. As LUNA soared to all-time highs, that investment hit an eye-popping $1.6 billion, Zhao noted.
But due to the dramatic implosion of LUNA and its sister token TerraUSD (UST) stablecoin last week, this stash is worth just around $2,400 — or as Zhao puts it, “not much”. These tokens are still held in the wallet they were sent to as they were “never moved or sold”, according to CZ.
Despite the extensive losses, Zhao says Binance will request the Terra team to first compensate retail traders who were dealt a big blow after the price shellacking last week before reimbursing the exchange.
“To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retails users first, Binance last, if ever,” the CEO said in a Monday tweet.
On the bright side, Binance also received $12 million worth of UST in staking rewards from LUNA tokens that the exchange staked in July 2021. This was also not sold or transferred.
CZ also clarified that Binance was previously involved in discussions regarding the investment of millions into LUNA in the latest financing round, but the deal fell through.
Meanwhile, the Luna Foundation Guard — the non-profit created to promote the growth of the Terra ecosystem — sold 80,081BTC (about 99.61% of total bitcoin reserves) in a bid to compensate the remaining affected UST users. The priority is to make whole those who had the smallest holdings.
Do Kwon Wants To Fork LUNA In “Revival Plan 2”
Last Monday, Terra supporters had their conviction put to the test when the UST stablecoin started de-pegging. UST and LUNA were designed to work together via a mint-and-burn mechanism and arbitrage. When UST’s price is above $1, the Terra protocol incentivizes users to burn LUNA and mint UST. In the same vein, when the UST stablecoin falls below the $1 mark, users are incentivized to burn UST and mint LUNA.
However, this mechanism broke and the stablecoin lost its dollar peg in a spectacular fashion. What followed was LUNA entering a death spiral and losing practically all of its value, subsequently leaving investors reeling in the aftermath.
Now, Terraform Labs CEO Do Kwon has suggested forking the LUNA blockchain into two in a similar style to Ethereum Classic’s fork from the original Ethereum network. The new chain will be called Terra (token name: LUNA) while the old embattled chain will be called “Terra Classic”. The latter will have the Luna Classic (LUNC) token and will continue being linked to the UST stablecoin. However, the new chain, which Kwon says will be “fully community-owned”, will move forward without the algorithmic stablecoin.
Under his proposal, LUNA holders on the Terra Classic chain as well as residual UST holders will receive an airdrop of the new chain’s tokens as the plan is for both chains to coexist. This means that UST and LUNA holders now have the option of sticking with the old chain or starting afresh.
Voting for the new proposal will commence on May 18. If passed, Kwon promises the new blockchain will go live as early as May 27.