Ethereum Founder Says A Terra Bailout Should Target These Holders

Ambar Warrick
May 16, 2022 Updated July 18, 2022
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
Ethereum Co-founder Vitalik Buterin Crypto-friendly politics

Ethereum founder Vitalik Buterin said on Sunday that any attempts by Terra to repay its holders should be deployed towards the most vulnerable of its holders.

In a tweet, Buterin called for Terra’s developers to shift their recovery efforts towards UST holders who weren’t whales, but rather smaller, retail investors.

The ETH founder’s comments were in response to a thread by Twitter user @PersianCapital, which highlighted that most of UST’s supply on Anchor Protocol, which was ground zero for the stablecoin crash, was concentrated towards whale holders.

Advertisement
Advertisement

Terra recovery could be skewed largely towards whales

@PersianCapital references a Terra governance proposal that moots using the blockchain’s $1.5 billion Bitcoin reserves to return some degree of value to UST holders. The proposal, which was made last week, appears to have seen heavy engagement by the Terra community.

But such a plan would entail that whales, which make up roughly 82% of all UST holders, would get a much larger share than smaller, more vulnerable holders.

The Twitter user suggested that instead, the $1.5 billion could be deployed more towards repaying smaller wallets- the poorest 99.6% of all UST holders by value. This could feasibly return every dollar invested to traders who were more likely to need it.

Buterin echoed this sentiment, stating that vulnerable Terra holders deserved a bailout more than their wealthy counterparts.

Coordinated sympathy and relief for the average UST smallholder who got told something dumb about “20% interest rates on the US dollar” by an influencer, personal responsibility and (sorry for your loss) for the wealthy.

-Buterin

Advertisement
Advertisement

But where is the recovery?

But even amid multiple recovery proposals, UST’s peg has steadily deteriorated, now standing at less than $0.2. Terra has issued a record amount of LUNA, and also burnt excess UST to help support the peg. Nothing appears to be working.

Terra founder Do Kwon had last week said the project would now deploy its $1.5 billion reserves to protect the blockchain’s developers.

But Kwon has so far provided scant information on the matter. This has also drawn a slew of questions over where exactly Terra’s Bitcoin reserves are now.

 

Advertisement
coingape google news coingape google news
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.