Popular proposals for the Terra Ecological Revitalization Plan

After experiencing a series of plunges and a death spiral, Terra's revival plan has been put on the agenda, and there are many different opinions.

On May 14, Terraform Labs co-founder Do Kwon proposed a proposal to protect the Terra ecosystem. His proposal came in response to validators discussing the possibility of forking the Terra chain, which involves compensating UST and LUNA holders who were unable to sell their holdings during last week’s price crash.

Do Kwon proposed that validators should reset network ownership to 1 billion tokens allocated to LUNA and UST holders, as well as a community mining pool to fund future development. Specifically, 40% of the newly allocated tokens will flow to LUNA holders before the unpegging event; 40% will be distributed proportionally to UST holders when the new network is upgraded; 10% will be distributed to LUNA holders before the chain stops operating, and the remaining 10% will be used to develop the mining pool.

On May 14, a community user named "FatMan" ( Twitter name @wassielawyer ) proposed a proposal of "tiered repayment: using LFG funds to return 1:1 USDC to all UST holders, each wallet does not exceed a certain upper limit, which is beneficial to small wallets." Specifically: 1. Only the initial deposit into Anchor is eligible for a refund, not earnings. 2. All forms of UST on Terra will be counted in the first batch of refunds, including UST staked in LP and mining pools such as Osmosis. 3. Not only small retail user wallets will be compensated, but all wallets, including whale wallets, will be paid, and each address will pay a maximum of a set upper limit.

FatMan said that there are three benefits to giving priority to small traders when compensating: Reduce emotional impact: Given that small holders make up the vast majority of the community in terms of quantity, this will greatly improve overall morale and sentiment, as more than 80% of Anchor users will become a whole; Easier to manage remaining creditors: Once most creditors are resolved at one time, remaining creditors (institutions and billionaires) will have greater liquidity because solutions can be discussed and executed in a close team; Most efficient use of funds during the transition: Using only $1 billion or $1.5 billion can make most affected users 100% complete in quantity, rather than making all users 10-20% complete.

Proposal link: https://agora.terra.money/t/proposal-tiered-repayment-1-1-usdc-refund-to-all-ust-holders-up-to-a-certain-cap-per-wallet-using-lfg-funds-favouring-small-wallets/6471

Ethereum founder Vitalik Buterin agreed that the Terra Foundation should prioritize compensating small UST holders.

A Terra community user named CosmicWish proposed that the Terra ecosystem contains software systems worth millions of dollars that provide significant value to UST and LUNA cryptocurrencies. Leveraging these valuable systems can restore trust in UST and LUNA. Specifically: The Terra internal team needs to study and outline a fundraising guide to raise funds. Ideas for raising funds include : 1. Each build system on the terra ecosystem [hopes] to generate funds from the operation of the Terra ecosystem, so each system needs to outline how much it can/is willing to provide. 2. Other closely related institutions, etc.

Once the raised funds exceed the amount of UST required to restore the peg, stop external trading of UST and use the raised funds to purchase UST to restore the peg. This UST should then be locked for a selected period of time to help restore trust in the token.

After restoring the hook, Terra will need to ensure it remains hooked:

• Limit the amount a wallet can hold/transfer. Transactions above this selected amount will be rejected. Users can request an increase to their wallet transaction limit via a public governance vote. Allow a publicly available list of wallets and their adjusted limits. This will allow Terra and trusted partners to be unrestricted while limiting external users will not significantly drive the market.

• The UST locked in the fund will generate a % yield which can be distributed to UST holders/wallets that lost funds during the attack. This will incentivize existing holders to return to the terra ecosystem and restore trust.

• UST and LUNA will need a system to ensure that the market cap imbalance between the two is managed. This can be done by incentivizing holders of one to convert to the other and dynamically increasing/decreasing through UST % yield/LUNA staking rewards.

• Adjusting the Mint/Burn market makers to ensure the UST peg stabilizes back to the peg quickly will ensure trust is not lost if the peg is not maintained for a long time.

• After a while, Terra and many projects generate revenue and a certain percentage should be allocated as collateral and held in different assets [gold, stocks, stablecoins, other projects, BTC, etc.]. The collateral spread across different assets protects the trust of Terra when certain markets lose value.

Proposal link: https://agora.terra.money/t/proposal-terra-ecosystem-revival/7731

Nikola-HydraChain, the team that claims to be behind two other successful peer projects in the CMC 500, has proposed “8 Steps to Save Luna.” Specific proposed measures: 1) Immediately stop new minting or block production and lock all Anchor withdrawals for 14 days (deposits are allowed); 2) Enable Tiers on Anchor and tie the Anchor earning economy to Luna demand; 3) Establish a disaster buyback fund to buy back and destroy LUNA at a constant interest rate; 4) Set a cap on the interest rate of newly minted UST to increase general utilization and strengthen the organic arbitrage economy while further reducing the velocity of money; 5) Strengthen Luna's economy around stability and staking, and focus on deflation mechanisms; 6) Set the CAP of UST to 20B UST, which will make UST deflationary and promote stronger demand for it at a psychological level; 7) Enable dynamic price oracles to monitor the ratio of k(LUNA):k(UST), and when the collateral is below 1, influence the UST price to start compressing in a controlled manner; 8) Use all swap fees collected as staking rewards to disaster fund providers and ensure a smooth transition of the fund to a new collateral mechanism that will essentially do the same thing → Buy back Luna to prevent future inversion.

Proposal link: https://agora.terra.money/t/proposal-8-steps-to-save-luna-now-economic-refactoring-proposal-from-industry-professionals/7510

At present, all proposals are still under discussion. However, the Terra ecosystem division plan is agreed to be in progress. Polygon Studios CEO Ryan Wyatt tweeted that he is working closely with various Terra projects to help them quickly migrate to Polygon, and Polygon will invest funds and resources to cope with these migrations to welcome developers and their respective communities to join the platform.