After last week’s drastic crypto downfall, on Sunday, May 15th, Ethereum founder, Vitalik Buterin stated that if Terra plans to repay its holders, it should be dedicated to the holders who are at the most risk.
Vitalik Buterin took to Twitter urging developers of Terra to move their recovery efforts to UST holders, the ones who are not whales, but smaller retail investors.
Buterin’s reaction was in response to a user known as @PersianCapital’s Twitter thread which was based on Anchor Protocol’s UST supply that had crashed below its dollar peg. The Twitter user’s main highlight was on whale holders.
The @PersianCapital’s Twitter thread was focused on Terra’s proposal which plans to raise funds using Terra blockchain’s $1.5 billion Bitcoin reserve so that they could return the loss to some holders. This proposal which was bought up last week has gathered a huge response from the Terra community.
However, if this plan is executed, then Whales would be the main receivers which account for approximately 82% of all UST holders, giving a larger share to Whales than the vulnerable holders.
Hence, the Twitter user was seen claiming that instead of allotting $1.5 billion to whales, it could be offered to the smaller wallets which stand at 99.6% of all the UST holders by value. This could possibly return every dollar that is invested by the neediest investors.
Meanwhile, Vitalik Buterin stressed that the vulnerable investors deserve a bailout more than the wealthy share.
What’s the Recovery Plan?
Though there are multiple recovery proposals made, Terra’s stablecoin and UST’s peg have been declining now at $0.16. In order to stop this de-pegging, the blockchain has issued a lumpsum amount of LUNA along with burning excess UST, but nothing seems to be working.
Do Kwon, Terra founder, had last week made an announcement that the project is planning to raise $1.5 billion in reserves to protect its developers. However, the founder, Kwon hasn’t given many details which have raised the question of where exactly is Terra Bitcoin’s reserves.
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