The recent drama with Terra’s Luna (read our previous research piece) wreaked havoc on crypto world and sent ripples across many digital domains, which still dominate the crypto agenda. Although the true reason behind Terra’s and UST’s collapse has been already properly discussed and documented, and heavy clouds are slowly disappearing, the main question remains how to avoid similar events in the future. But the very fact that, despite grim anticipations that Terra is done, voters decided to rescue the epic token, signifies a very valuable affirmative action telling us that, perhaps unlike in the Street investments, crypto universe isn’t primarily directed by fear and greed, nor is it driven by mob rules.

Although initially very few of us believed Terra’s project is capable of self-healing and self-reviving, surprisingly, the majority of voters participated in the poll deciding on whether to give Luna a second chance in some new form, voted FOR.

Of course, any successor of the beleaguered token would immediately face an avalanche of loss-compensation-related claims. In order to prevent such a dangerous development, all those investors meant to be incentivized. Simple airdrops – representing a popular solution in similar situations in the past – would hardly suffice, but the basic idea stemmed from exactly the airdrops. The new management team decided that investors who held over 10,000 LUNA tokens before UST’s implosion would receive the new tokens periodically, to prevent them from immediate selling. While UST has been the central narrative of Terra’s growth story over the last year, the distribution of UST has led to the development of one of the strongest developer ecosystems in crypto. It’s hard to say if it’s a hundred percent foolproof approach, but it certainly deserves a good praise. Over 30% of their tokens would be unlocked initially, and the remaining 70% would be released over two years. New tokens will be distributed after six months to such holders. This is to ensure that small Luna holders have similar initial liquidity profiles. This would cover 99.81% of Luna wallets, while only representing 6.45% of total Luna at the Pre-attack snapshot.

Wallets with more than 1 million LUNA or UST prior to UST’s depegging from the U.S. dollar would have to wait more than a year before receiving any tokens, with a four-year vesting period thereafter, according to the revival plan. LUNA to be airdropped across Luna Classic stakers, Luna Classic holders, residual UST holders, and essential app developers of Terra Classic. Post-attack UST holders’ distribution will be as follows: 20% will be reduced to 15%. This will be done to ensure that depegging related allocation is on par with the original stakeholder (pre-attack Luna) allocation. The 5% saved will be allocated to the community pool.

All initial float allocations will be modified from 15% to 30% to increase initial token float.

All in all, the spirit of the decision was to create a new Terra chain without the discredited itself algorithmic pseudo stablecoin foundation. The old chain will be called Terra Classic (token Luna Classic – LUNC), and the new chain will be called Terra (token Luna – LUNA).

Terra’s app ecosystem still contains hundreds of developers working on everything from DeFi to fungible labor markets, state-of-the-art infrastructure and community experience, while Terra Station has a large installation base, with a million+ users across the world. Although distressed, strong brand recognition and a name that almost everyone in the world will have heard about $UST peg failure is Terra’s DAO hack moment was a chance to rise up anew from the ashes.

In order to allocate a large portion of the token distribution, the following steps will be made: 1) provide emergency runway for existing Terra dapp developers. 2) align interest of devs with the long term success of the ecosystem. 3) network security to be incentivized with token inflation. Target staking will reward 7% per annum of UST or LUNA bridged off of Terra.

Users with bridged UST or LUNA who express willingness to be included in the post-attack snapshot will need to bridge back to Terra before the snapshot is taken.

Let’s see how it works!