With the Luna crypto crash seeing Luna and TerraUSD collapse, holders are left wondering whether a Luna recovery is possible.
Amid the crash, Terraform Labs CEO Do Kwon offered a Luna recovery plan to stabilise the current crypto wreckage. This comes amid talk about a Luna delisting and trade suspension from exchanges, including Wrapped Luna.
Dubbed as one of the biggest crypto crashes ever, seeing Luna drop over 99.9% and UST lose its peg, here's a look at the Luna recovery plan proposed by Kwon.
Luna Recovery: Do Kwon Reveals Terra Recovery Plan
After first proposing a Luna recovery plan that prioritised absorbing the UST supply, Do Kwon has now offered an alternative idea that would restart the Terra Luna ecosystem and focus on saving the Layer-1 instead.
Echoing the Luna Go Forward Proposal by the TerraBuilderAlliance, it offers a major shakeup that involves rolling Luna back through a hard fork to prior to the crash. This would create a new Luna, and leave behind Luna Classic (LUNC).
Here, a new Luna with a supply of 1 billion would be distributed. 35% of this Luna would be allocated to pre-attack Luna holders, and 10% to current Luna holder. A further 10% would go to pre-attack UST holders, and 20% to current UST holders. The final 25% would go to a community pool, with 10% marked for development.
In a previous Twitter thread, Kwon reversed his initial focus on UST towards Luna. "I still believe that decentralised economies deserve decentralised money – but it is clear that UST in its current form will not be that money," he said.
"Terra needs a community to continue to grow and make its blockspace valuable again," said Kwon in his previous plan. "The only way to do this is to make sure that token holders before the attack commenced, the most loyal community members and builders, stick around to keep providing value."
Of course, this remains just a proposal, and without a consensus among the Terra community, it might never happen. A vote is set to happen on Kwon's proposal on May 18. The new network will launch on May 27 if successful.
However, a preliminary Terra Luna vote posted on Terra Station reveals 92% of the community is against a potential fork.
The alternative path towards a Luna recovery proposed by some Luna holders involves a Luna burn. By destroying much of the circulating supply, they hope it would push the price up without a fork.
- Read More: How To Buy Terra Luna After Collapse
Is Luna Recovering?
In terms of sheer price, Luna has not recovered to where it was but has risen from its all-time low. At the time of publication, the price of Luna is $0.00017- a decline of 99.9% in the last seven days, but still up over 17,00% from its low. For context, Luna's price at the start of May hovered around the $80 mark.
After the weekend saw Luna's price somewhat start to stablise, it is now down 6% in the last 24 hours.
Luna's market cap has recovered to above $1 billion, down from its $20 billion market cap on May 9. While still a drop of over 90%, this is well up from the $58 million market cap it hit on May 13.
The Luna circulating supply is one explanation for this sharp drop in Luna's price. On May 12, there was over 13 billion Luna in circulation, compared to 343 million Luna prior to the crash. As of May 13, this has jumped to 6.5 trillion Luna.
So, while Kwon said the "UST peg failure is Terra’s DAO hack moment - a chance to rise up anew from the ashes," this newfound resurgence hasn't come just yet.
Is UST Recovering?
The UST recovery has not yet happened, with the TerraUSD stablecoin now sliding further from its $1 peg.
It is now trading at $0.09 - down 89% in the last week. However, this remains above its low of $0.04 on May 13.
The UST recovery, which would see the stablecoin repeg to $1, now seems more uncertain. While Kwon's initial recovery plan seemed to prioritise this repeg of UST, the community does not appear to agree.
Perhaps blaming UST for the collapse of Luna, they instead wanted to first focus on Terra Luna and the Layer-1, before then saving UST.
If a UST recovery plan is accepted by the Terra community, it seems the once algorithmic stablecoin may need to adopt some elements of collateralisation.