The Terra Foundation has announced a reimbursement plan where they will compensate UST holders. The next question was about how they plan to go about it. Who will get the reimbursement, and who won’t? Because the team obviously doesn’t have money for everyone. So, in this, Vitalik Buterin, the founder of Ethereum, commented, saying that Terra should protect smallholders and prioritize them over the whales. Even Binance’s CEO said that the retailers should be protected.
The reimbursement proposal
The Luna and UST investors are in serious losses as the price of the stablecoin has gotten depegged, and Luna has fallen 100%. So, the idea is to compensate for the losses of UST investors when the peg eventually returns back to $1. The community has proposed that as the reimbursement begins, small investors who were burned by this entire fiasco should be paid first. Once all of the small investors are paid, the team can figure out how to compensate whales. The entire cost of this reimbursement proposal is expected to be between $1-$1.5 billion.
Vitalik Buterin also agreed to the plan of paying retailers first because they were the ones who got killed by the insane 20% APY on UST. So, they should be prioritized. He also mentioned that having an insurance plan in times like this can be beneficial.
Future of Terra Luna
If the team could have fixed everything, it would have been great, but in the real world, everything is not so ideal. The billions of dollars in BTC didn’t help to reactive the dollar peg, so there is no easy way to go about this. The team has proposed a hard fork to the blockchain and the release of Terra 2 to add liquidity and stabilize UST. However, again, why will anyone want to invest in a dying project.
Even the co-founder of Dogecoin, Billy Markus, has asked Do Kwon (founder of Terra) to leave the industry. He also said that if they want to pay investors, they shouldn’t make new victims with a new token and instead use the money they already have.
What are your thoughts as Vitalik Buterin says Terra should protect smallholders first? And were you holding any UST? If yes, then how much? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.