After pitching a revival plan, Terra’s creator Do Kwon took to Twitter saying he is devastated by the recent turn of events.
TerraUSD [UST], a stablecoin broke its peg to the dollar earlier this week and fail to recover. Its sister coin Luna too fell from grace this week and is trading at $0.0003974 at press time.
Acknowledging that the UST in its current form is irrecoverable, the founder of the LUNA governance token and TerraUSD stablecoin has laid out a revival plan on Terra’s Agora governance forum, moving forward.
The proposal called for distributing ownership in the network among holders of UST and LUNA. It invited a lot of criticism. One market analyst questioned the move to save UST without the collateral, saying it “made 0 sense”.
Another remarked that “it looks like a captain buying time to save himself before finally announcing that the ship is sinking”.
Even DOGE founder jumped in by advising Kwon to stop bringing “in new victims to fund the previous ones” and leave the space forever.
Others started digging up old videos purportedly showing the founder making some controversial statements that detractors claimed reek of arrogance.
For instance, a tweet shared by cryptowhale contained a 25-sec clip where Kwon was quoted as saying “95% of coins are going to die, but there’s also entertainment in watching them die too” and laughing it off.
Terra’s UST’s algorithmic mechanism was a risky model, doomed to failure
That said, the debacle has sparked discussions on what policymakers should consider going forward with stablecoin regulation. One of them is leading Blockchain lawyer Jake Chervinsky who in a Twitter thread insisted that lawmakers should step in to inject some sort of stability and protect investors.
Calling UST’s algorithmic mechanism, “a risky model that many predicted might fail,” Chervinsky cited the executive order [EO] issued by the US president, that called for identifying crypto’s opportunities & risks, which according to him might be the gamechanger.
He then called for following the process called for by the EO, developing a bipartisan consensus in Congress, and adopting new regulations that are fit for purpose.