After a short absence from Twitter and social media, Terra co-creator Do Kwon emerged on Friday to propose an "ecosystem revival plan" for the network.
In it, he suggests that UST is not coming back—and the Terra blockchain must redistribute tokens to move forward.
"The holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes," writes Kwon on the Terra research forum. "While a decentralized economy does need decentralized money, UST has lost too much trust with its users to play the role."
Instead of building back with UST, Kwon proposes revitalizing the network around the Terra blockchain network: "We’ve built up one of the largest and most vibrant developer ecosystems in crypto, with some of the smartest minds in the world working on products with the best UI/UX."
To "preserve the community and the developer ecosystem," Kwon proposes resetting the distribution of the network's LUNA governance tokens to 1 billion, 40% of which would be redistributed to holders before Terra's UST stablecoin became de-pegged from the U.S. dollar over the weekend.
Another 40% will go to those who hold UST at the time of the upgrade. A further 10% would go to LUNA holders when the blockchain was halted today for a second time in 24 hours. The remaining 10% would be used to pay for future development on the network.
The price of LUNA fell nearly 100% in the span of a few days as UST, the stablecoin it backs, slipped from a $1 peg. LUNA is now trading for a fraction of a penny, while UST is selling for $0.15 on the dollar.
UST and LUNA were designed to work in tandem, with the former kept near $1 via a burn mechanism that encouraged traders to take advantage of arbitrage opportunities. But as interest rates in the network's primary use case, Anchor Protocol, declined, capital fled, leading to a death spiral.
Plenty of projects are building on the Terra network. But there are also other blockchains that are signaling an openness to absorb such teams into their own networks.
The Terra network has already lost most of its financial capital. Now, it must work fast to preserve its human capital.