Terra ($LUNA) and its algorithmic stablecoin TerraUSD (UST) tanked about two weeks ago. The token experienced a 99.9% drop in price, with its UST stablecoin de-pegging from the US dollar. UST still has not recovered and it’s at 5.6 cents instead of $1 where it is supposed to be.
In a bid to salvage the situation the Terra ($LUNA) ecosystem has put forward the 1623 proposal. The proposal if approved will split the Terra blockchain into two (2) separate chains. The proposal has, however, attracted some resistance from community members. However, voting is still ongoing and is scheduled to end on May 25, 2022.
This article covers recent amendments to proposal 1623. And what this amendment means for the entire Terra ($LUNA) ecosystem.
1/ We have published an amendment to Proposal 1623, incorporating the community’s feedback since its publication 2 days ago. Please see below for details 👇https://t.co/liISBn3Baa
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) May 20, 2022
Amendments to Proposal 1623
Three major revisions will be carried out on Proposal 1623. These revisions will include;
1. Increasing Genesis Liquidity
This revision will help to protect small-scale Terra ($LUNA) holders. By reason of this revision, Terra plans to increase its initial liquidity parameters from 15% to 30%. However, this increment will involve users holding aUST tokens before the attack. Also, “[…] post-attack $LUNA holders, & post-attack $UST holders” will also enjoy this increment.
Interestingly, this move is also a deflationary one. As it will help prevent inflationary pressure on the Terra ecosystem in the near future.
2. $LUNA Holders Before The Attack To Get New Liquidity Profile
As part of the revision, Proposal 1623 will offer pre-attack $LUNA holders a completely new liquidity profile. The new profile will provide wallets with less than 10,000 $LUNA tokens the increased genesis liquidity of 30%. The 30% will be unlocked at the launch of Proposal 1623. The remaining 70% will follow suit over the next two years at 6-month intervals.
Speaking on the revision, Terra disclosed that the new liquidity profile will ensure “[…] small $LUNA holders have similar initial liquidity profiles.” Also adding that the profile will involve an estimated “[…] 99.81% of $LUNA wallets while only representing 6.45% of total $LUNA at the Pre-attack snapshot”.
3. Reducing Allocation to Post-Attack TerraUSD (UST) Holders
Investors in the Terra ($LUNA) ecosystem will not enjoy the increased Genesis liquidity of 30%. Instead, the allocation for Post-attack holders will be dropped from 20% to 15%. This, in turn, will help keep the depegged allocation in sync with the original allocations.
In conclusion, the crisis in the Terra (LUNA) ecosystem has contributed largely to the recent bearish trends in the blockchain and cryptocurrency space. Proposal 1623 is showing great potential as the best course of action to salvage the situation.
Also, at the time of writing, LUNA was trading at $0.00011037 with a market cap of $721,204,025 and a 24-hour trading volume of $250,459,934. The token price is also down by 20.2% in the last 24 hours.
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