CryptoMode

Victims of the recent LUNA and UST crashes will be somewhat happy to hear that there is a plan of action to move forward. It may not be the decision everyone wanted, but the “community” has voted in favor of creating a new chain. That also means there will be new tokens, which will create a big mess unless everyone gets on board.

LUNA Will Get A New Chain

It is not entirely surprising to see the plan put in motion by Do Kwon come to fruition. From day one, Kown has advocated for creating a new Terra blockchain and renaming the old chain to luna Classic. It appears he will get his wish, as Terra Governance Proposal 1623 received overwhelming support to create a new blockchain for LUNA.

That is a surprising development, as most community members favored a token burn, even though that would cause its own headaches. The LUNA supply is heavily inflated, and it would be virtually impossible to burn tokens without buying them from the market. Moreover, it would not offer long-term success or guarantees. 

Then again, creating a new chain and abandoning the old one might not be the best approach either. The current network will be Terra Classic with LUNC tokens, and the new chain will be LUNA. That also means there will be new tokens for existing holders, undoubtedly creating a pretty hot mess. There are far too many coins on exchanges and trading platforms to ensure people rightfully get the number of coins they are entitled to. 

Is The Vote Legitimate?

That will be the primary question people need to ask themselves. There seems to be a strong disconnect between the voting on this proposal and what the community truly wants. Even though 65.5% of the votes are in favor of this proposal, there are also 13.2% of votes vetoing this idea. The over 200 million “yes” votes seem a bit shady overall, but it is what it is.

When such a proposal magically gains support, it is crucial to wonder who will benefit from this solution. It will certainly not affect LUNA and UST holders, as they will be given a new token and chain that has everything to prove. Moreover, it may take a while to issue the new tokens correctly, creating even more friction. While it is good to have a solution of sorts, forking the network rarely goes well. 

Who Will Get Tokens And When?

There is still much uncertainty regarding the issuance of the new LUNA tokens. Binance, the leading crypto exchange, is working with the Terra team to offer some help on this front. Most of LUNA’s liquidity is found on Binance, as most other exchanges no longer support LUNA trading since its price collapsed. 

Considering this plan is set to go into effect in 48 hours, more transparency will be needed. Users have been left in the dark for weeks and will have even more questions following this news. Although getting the network transition needs to be the first step, that is a big problem. Afterward, everyone will hawkishly watch the LUNA supply to ensure it doesn’t inflate to trillions of tokens again. 

UST Will Survive, Sort Of

Many people may wonder if there is a plan to recover UST and bring its peg back. The good news is UST will survive on the Luna Classic chain and will not disappear forever. However, there is no indication it will ever return to its peg or gain widespread usability again after the recent incidents. Moreover, one has to wonder if developers want to touch Luna Classic when there may be a “superior” version available to them. 

For now, UST is still trading on exchanges, yet its price remains all over the place. If there is insufficient overall support for Luna Classic – validators and nodes will move to the new chain – it would become very difficult to move UST balances across the network. Again, there are many questions and very few answers as to what will happen to this stablecoin. 

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