The Terra team has commenced the process of deciding the future of its ecosystem and compensating holders for their losses. 

1/ Terra governance prop #1623 to rename the existing network Terra Classic, LUNA Classic ($LUNC), and rebirth a new Terra blockchain & LUNA ($LUNA) is now live.

Vote here: https://t.co/ZlGxNCUTMa https://t.co/plj0guJwao

— Do Kwon ? (@stablekwon) May 18, 2022

As part of efforts to make Terra investors whole after suffering huge losses last week, TerraForm Labs has announced that it has initiated a new proposal that will determine whether a new chain will be forked.

Details of the Proposal

The Terra proposal dubbed #1623 was launched today and will be the major determinant of the next step the Terra team will take going forward.

The proposal seeks to rename the existing network to Terra Classic and previous tokens will be renamed LUNA Classic ($LUNC), and it will also fork a new Terra blockchain and token dubbed LUNA ($LUNA).

Meanwhile, the team does not seem likely to continue with TerraUSD (UST) at the moment, as the proposal did not include the popular stablecoin that recently lost its peg to the United States Dollar.

It is worth noting that the proposal is backed by a number of validators and builders, who have indicated support to continue working on the network once a new chain is born.

3/ This proposal has broad support of Terra builders – @scv_security @ProtocolTalis @prism_protocol @NexusProtocol @knowhere_art @tns_money @leap__terra @staderlabs @setten_io @realTerranOne @coinhall_org @randomearth_io @PhoenixFinan@ape_board @flipsidecrypto

— Do Kwon ? (@stablekwon) May 18, 2022

According to the team, if the proposal passes and reaches the required number of votes, a final snapshot of investors’ LUNC holdings will be taken on May 27, 2022, at block 7790000 and a new Terra network will be born.

Results of the Proposal

After the new Terra network is launched LUNA will be airdropped to holders of the LUNC tokens.

Over 67 million votes have been registered with the vast majority of users supporting the proposal at press time. So far, 88.95% of participants have voted in favor of the proposal, 0.03% declined the offer, while 11.01% voted “No with Veto”.

The voting exercise will run until the next seven days, after which a decision will be made that will determine the future of the Terra ecosystem.

Meanwhile, many cryptocurrency enthusiasts, including Binance CEO and founder Changpeng “CZ” Zhao, have taken to various social media platforms to condemn the idea of forking the existing Terra chain to birth a new network.

However, the cryptocurrency community is united on making investors whole again, and the steps to make this a reality does not really matter.

Beware Of This Fake Terra Luna Classic (LUNC) Scammer.

The crypto space is known to be a huge playing field for scammers who capitalize on the fact that stolen cryptocurrencies are hard to trace. That’s what the scammers behind the current attempt to defraud LUNA investors are counting on.

The latest expose by PeckShieldAlert reveals that there’s a scam going on. Apparently, someone is claiming to hold competitions for Terra Luna and UST holders. The fake Terra Luna Classic Twitter account is trying to lure unsuspecting victims by claiming to sell the new Luna 2.0 or LUNC on PancakeSwap, promising free BUSD for buyers. The scammer appears to be using BSC (Binance Smart Chain) for their scam operations.

#PeckShieldAlert #honeypot PeckShield has detected Terra Luna Classic $LUNC https://t.co/cvaFjEBPrn is honeypot. Do *NOT* fall prey to it! Terra 2.0 (or not) is still in Preliminary Vote. #LUNAtics @LFG_org @terra_money @pinkecosystem pic.twitter.com/RF5DoD9LVe

— PeckShieldAlert (@PeckShieldAlert) May 18, 2022

It’s A Honeypot

PeckShieldAlert has taken steps to warn people of this potential scam that could lead to the loss of funds for victims. Apparently, this scam is trying to operate a honeypot whereby users who pay to buy the so-called new LUNC end up with nothing. It’s a pure con that people should avoid.

There’s No Terra Luna Classic Yet

A few days ago, Terra Luna’s Do Kwon proposed the forking of the Terra chain to create new crypto to be named Terra Luna Classic (LUNC). However, this proposal was quashed by voters, with over 90% of the participants voting in favor of burning the extra Luna instead of executing a fork. It appears that the scammer is exploiting rumors of a Luna fork to lure victims into sending them money.

While exposing the scam on Twitter, PeckShieldAlert tagged the Luna Foundation Guard (LFG) and Terra Money (UST’s Twitter handle). The community would expect the two Terra teams to find a way to stop the scam. Also, this scamming attempt, while undesirable, may pave the way for Terra to finally clear the air on whether or not LUNA will be forked.

Terra (LUNA) community wants nothing else but LUNA burning.

The collapse of the Terra Luna ecosystem was a huge shock to the crypto industry. It reveals a fundamental flaw in how some blockchains are managed, a flaw that can lead to very quick capitulation of their entire ecosystem. However, Terra’s founder, Do Kwon, has proposed a plan to take the failing ecosystem in a new direction.

Do Kwon’s plan is to fork the Terra chain and create a new LUNA, with the current one designed as Luna Classic (LUNC). However, the majority of the Terra community are against this plan. Even the Binance CEO has offered his opinion on the matter, saying that the forking plan is flawed in that it wouldn’t give the newly forked coin any relevant value.

Personal opinion. NFA.

This won't work.
– forking does not give the new fork any value. That's wishful thinking.
– one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).

Where is all the BTC that was supposed to be used as reserves? https://t.co/9pvLOTlCYf

— CZ ? Binance (@cz_binance) May 14, 2022

Binance’s CEO also supports the community idea that Luna supply can only be reduced by burning LUNA and nothing else.

Reducing supply should be done via burn, not fork at an old date, and abandon everyone who tried to rescue the coin.

I don't own any LUNA or UST either. Just commenting.

— CZ ? Binance (@cz_binance) May 14, 2022

Win Back Trust

It appears that Do Kwon and his team are leading the Terra ecosystem in the wrong direction. That’s according to investors who feel that their trust in Do Kwon and the Terra development team is being abused. The community wants an urgent burning of Luna’s existing supply.

If @stablekwon really wants to gain SOME trust back, he only can start burning the existent $LUNA supply and build back better.

A hardfork will feel like a knife in the back to every holder, feeling like the captain has jumped ship. https://t.co/j0FsQlDLuM

— CryptoCribz ⓣ (@CCribz) May 17, 2022

According to these community members, creating a new LUNA fork would outright betray those who have already invested in LUNA. Do Kwon’s proposal is to fork the new LUNA and then airdrop the new coins to the affected investors. However, this doesn’t guarantee that the new coin will have any higher value than the current one.

As such, most people are in favor of burning the existing LUNA stash to boost demand and price. In fact, a recent voting session went awfully against Do Kwon’s proposal. About 90% of the voters faulted the plan and stood for the burning of extra LUNA as opposed to forking.

How The Burn Would Work

According to a tweet by one user, the burning mechanism can be implemented easily by introducing a 10% tax on all buy and sell LUNA transactions. Increased trading volumes would mean more extra LUNA burned. For example, a transaction volume of around 10 billion LUNA traded would result in around 1 billion coins burned. The user opines that this would be the best solution as compared to creating a whole new LUNA coin. Whether Do Kwon and his team will take the community’s advice and scrap the forking plans is yet to be established.

Circle CEO: Terra (LUNA) Was A House OF Cards That Was Bound To Collapse.

The collapse of the Terra ecosystem has sent shivers across the crypto industry as the markets take a hit downwards. While this may be an isolated incident, people like the CEO of Circle see it as a serious lesson to be noted by market players.

Jeremy Allaire is the co-founder, chairman, and CEO of Circle, a platform that helps developers and businesses to execute payments using stablecoins via eCommerce. For this reason, the CEO is concerned about the failure of Terra’s UST (TerraUSD) to maintain its market value as a stable coin and the price crash of Terra Luna.

Speaking to Bloomberg Crypto, Jeremy Allaire said,

“It’s an extraordinarily difficult problem and no one has solved it. Over-collateralized stablecoins that are decentralized have held the test of time. That’s more like a margin borrowing system as opposed to a stablecoin itself.”

The crypto world has been riveted by the rapid collapse of the TerraUSD stablecoin.

But its implosion may bring about something just as noteworthy: the death of a major blockchain. Jeremy Allaire shares more on the crypto show https://t.co/0MSXGPiq1p pic.twitter.com/IBKXJlIXax

— Bloomberg Crypto (@crypto) May 18, 2022

“House Of Cards”

Various crypto analysts and investors have come out to criticize what they see as Terra’s failure to quickly take charge and prevent the crypto and its sister stablecoin from crashing hard. However, according to Circle CEO, this event was bound to happen one way or another, although Jeremy doesn’t spell out the magnitude that his team expected.

Going on, he opined,

“So our view, and we were looking very closely at the Terra ecosystem and the Luna anchor, UST, our view for the last 6 months is that this was a house of cards, it was very high risk, and there were multiple scenarios that we could see it would be triggered into a death spiral and that’s exactly what happened.”

Current Terra Condition

At the time of this writing, Terra Luna is at position 212 on CoinMarketCap and trading at a measly $0.00018. UST is at position 44 and valued at $0.12 after being de-pegged from USD a week ago. The Terra team, led by Do Kwon, has since drawn up plans to save the Terra ecosystem by forking the chain to create a new LUNA. It’s not clear whether this will work to save the system, especially considering that a number of people in the industry are already against the plan.

Phoenix Launching First Decentralized Exchange on Terra 2.0. 

More developers are preparing to make Terra 2.0 work, as a new decentralized exchange has announced that it will be launching on the new Terra chain soon after it goes live.

TerraForm Labs’ willingness to fork a new chain out of the existing one as part of efforts to make investors whole again has been widely accepted by many, including investors, validators, and decentralized application (dApp) developers.

Following the team’s announcement of Terra 2.0, Phoenix Finance, a decentralized exchange, announced that it would be launching the new Terra chain shortly after the network is live.

Phoenix Finance noted on Twitter that following Terra’s rise from the ashes to one of the god’s realms, Nirvana, it would make its debut on the new network.

“Rising from the ashes and entering the realm of Nirvana. We’re thrilled to announce that we will be bringing the first and the best DEX to the Terra 2.0 ecosystem very shortly,” Phoenix said in a tweet today.

Rising from the ashes and entering the realm of Nirvana.

We’re thrilled to announce that we will be bringing the first and the best DEX to the Terra 2.0 ecosystem very shortly.

Follow us for more updates.#LUNAtics #TerraIsMoreThanUST #terraluna pic.twitter.com/bSrhYrrmFW

— Phoenix Finance (@PhoenixFinan) May 18, 2022

Terra’s Willingness to Rise From the Dust 

Meanwhile, the development comes less than 48 hours after the Terra team disclosed that they will be forking a new chain out of the existing one, as they prepare to rebuild quickly in order to make investors whole.

Since the announcement was made, Terra has received positive responses from the community, especially validators, who have committed to building on the new Terra chain once it eventually goes live.

Although Terra has suffered a few losses this period, with its in-house legal counsel resigning from their positions, the firm is prepared to rise from the dust via the launch of Terra 2.0.

Phoenix Features

Phoenix Finance is a decentralized exchange nicknamed the decentralized derivatives marketplace. Users can add liquidity to the platform in order to earn passive income in the form of PHX rewards.

In addition, users can also hedge and leverage various cryptocurrencies like Bitcoin, Ethereum, and other Ethereum-based tokens on the Phoenix platform.

According to the Phoenix team, users can also trade decentralized leverage tokens on the DEX with up to 3x leverage on either short or long positions.

The MakerDAO founder had warned that UST will go to zero because it is a solid Ponzi.

It is no longer news that TerraForm Labs ecosystem tokens, including TerraUSD (UST) and LUNA, suffered one of the most devastating dips since the inception of the cryptocurrency market.

With UST losing its peg to the U.S. dollar, LUNA followed the supposed stablecoin and crashed significantly, and investors of these tokens were massively affected by the dip.

While many cryptocurrency experts have warned about the imminent crash of Terra tokens, many investors failed to heed these warnings, as they ended up paying the price.

MakerDAO Founder Issued UST Warning In January

On January 4, 2022, Rune Christensen, the CEO, and founder of MakerDAO, warned investors that the UST stablecoin, as well as Magic Internet Money (MIM), are solid ponzis.

According to Christensen, despite the fact that people are making huge profits via their investments in UST and MIM, the digital currencies do not have the right resilience integrated into them.

He added that the lack of resilience in the tokens would expose the duo to unusual volatility that could see the price of the assets crash to zero.

“Look, UST and MIM are solid ponzis and I respect that. You can make good money off them for sure. But they are not built for resilience and they are going to 0 once the market turns for real Now stop trying to scam users looking for actual stability into being ur exit liquidity”

Look, UST and MIM are solid ponzis and I respect that. You can make good money off them for sure. But they are not built for resilience and they are going to 0 once the market turns for real

Now stop trying to scam users looking for actual stability into being ur exit liquidity

— Rune (@RuneKek) January 4, 2022

As expected, Do Kwon, the CEO, and co-founder of TerraForm Labs, came to the defense of his project, UST, and said some harsh words to Christiansen.

”I thought you were [dead] already,” Kwon said.

I thought you were ded already

— Do Kwon ? (@stablekwon) January 4, 2022

It is worth noting that both MIM and UST have a common feature, which involves creating an opportunity for the crypto community to earn passive income by investing in the project.

UST Investors Warned Again

As reported last week, Kevin Zhou of Galois Capital, who warned people to avoid investing in Terra, noted that UST crashed due to the high ROI paid to Terra’s Anchor Yield program investors.

With investors earning nearly 20% for depositing their funds in the Anchor protocol, the Terra team was not able to pay interest as more people invested in the project, Zhou said.

Zhou, who also described the Terra system as a Ponzi, noted that investors were being siphoned by the Terra team.