Here’s How Terra Plans To Distribute Emergency LUNA Funds

The Terra community on Monday released a new proposal on how the relaunched blockchain should deploy LUNA tokens to its vast developer pool.

The proposal, called the “Proposed distribution method for 0.5% emergency LUNA allocation,” is intended to act as as supplement to the Terra Ecosystem Revival Plan.

The revival plan designated a 10% LUNA supply to incentivize developers on Terra 2.0, of which 0.5% was an emergency fund to help project parties build products after the network launch.

Monday’s proposal suggests that three groups are eligible for the 5 million in LUNA emergency allocation, these include:

• projects on Terra Classic which achieved product-market fit and TVL (2.5 Million LUNA)
• projects on Terra Classic which achieved product-market fit, but without measurable TVL (1 Million LUNA)
• pre- and post-launch projects which have not reached produce-market fit (1.5 Million LUNA)

Terra Community Announces Proposal for 0.5% Emergency Allocation

The proposal is made on behalf of Terra community members including representatives, validators, Terraform Labs, and others seeking a distribution method for the emergency fund. Terra plans to distribute 10% of LUNA supply as 0.5% for emergency allocation, 1.5% for the Developer alignment program, and 8% for the Developer mining program.

The proposal ensures that projects which achieved product-market fit have support and incentives to continue building on Terra 2.0. Moreover, the long-running projects which have not yet achieved product-market fit have support to continue building.

Polls within the community suggest $100k-$300k worth of LUNA as the required amount for 50 projects to run for 6 months. Moreover, the eligibility and allocations should be determined by a council consisting of longstanding Terra community members such as Karma, Panterra0x, Cephii, Seb, and GJ.

Furthermore, projects which have achieved product-market fit and added value to tooling and infrastructure should receive an additional $500k-$1 million in LUNA. The proposal recommends Coinhall, Terrascope, Setten, SCV, Terran One, Random Earth, Knowhere, Leap Wallet, and TFM for additional funds.

Moreover, pre-depeg Terra Classic TVL can be the best metric for measuring projects’ value to the network and the resulting share of the emergency fund. The proposal suggests distributing 2.5 million LUNA in pro-rata on contribution to TVL, with a max cap at 25%.

Performance Conditions for Projects

The Terra Ecosystem Revival Plan 2 required teams to sign a pledge committing to use emergency allocation for development on Terra 2.0 for a year, launch products within 3 months, and provide transparency by reporting quarterly on Agora. If projects fail to deliver in time, funds will be refunded.

Thus, the proposal suggests distributing 50% of the funds now and 50% after 2-3 months to ensure meaningful progress in product development.