Terra backers are holding a revival plan to save the cryptocurrency without the pegged stablecoin that caused it to lose 99% of its value.
“With overwhelming support, the Terra ecosystem has voted to pass Proposal 1623, calling for the genesis of a new blockchain and the preservation of our community,” Terra’s official Twitter account posted Wednesday.
According to the proposal, a new blockchain will be created, a shared ledger of transactions.
Earlier in May, terraUSD, a supposedly stablecoin, plummeted below its $1 peg. Consequently, investors rushed to sell Luna, resulting in a dramatic price plunge.
Under the new proposal, Terra plans to distribute tokens to holders of the old luna — soon to be renamed “luna classic” — and UST tokens.
Roughly 30% of coins will be sent to a pool of investors in the Terra community; 35% will go to luna holders before the token lost most of its value; 10% to pre-collapse UST holders. An additional 25% of tokens will be allocated to traders who still own luna and UST after the crash.
Luna surged more than 20% Wednesday, according to CoinGecko data. UST was up over 50%.
Many market observers remain unconvinced Terra’s revival plan will work.
“There has been a massive loss in confidence overall in the Terra project,” said Vijay Ayyar, head of international at the Luno crypto exchange.
“This is a very crowded space already with a number of already well-entrenched platforms that have lots of developer activity. I don’t see why Terra would succeed here.”
The Terra crash has magnified investor fear about bitcoin and the crypto market. The broad crypto market has shed roughly $600 billion in value in the past month alone.
Regulators are growing concerned, with the Federal Reserve Chair Janet Yellen and European Central Bank President Christine Lagarde calling for urgent regulation of crypto — especially stablecoins.