90% of the 2,747 Luna Blockchain community voters do not support the Luna Blockchain fork. This rejection stops Do Kwon’s proposal that seeks to split the Luna Blockchain platform.
Although the voting is preliminary and meant to gauge the general sentiments on the platform, experts believe that the community members are unlikely to budge when the actual voting starts on May 18th. The voting took place on Terra’s research and governance forum, where members share ideas, sentiments, and opinions that shape governance policies that govern the platform.
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The Terra UST Crash Brings into Focus the Stability of Algorithmic Stablecoins
The proposed fork is a reaction to the recent TerraUSD (UST) crash after it lost its algorithmic pegging. The result was flooding the entire ecosystem with the UST leading to a meteoric plunge far below the ideal $1. The market capitalization plunged from $400 billion in hours, wiping off investors’ capital.
The domino effect has dazzled the global Crypto community. Moreover, governments have reacted to this effect, and algorithmic Stablecoins are on the receiving end. For instance, the UK Financial Services and Markets Bill seeks to recognize Stablecoins backed by real assets as a means of payment and excludes algorithmic Stablecoins like the UST.
The Fork Was Designed to Write off the UST
Do Kwon proposed to split the Luna Blockchain into Terra and Terra Classic. Terra was to host the Luna (LUNA), with the Classic version having the Luna Classic (LUNC) as its native token. In the new arrangement, the UST would have been foregone and eliminated from the system marking an end to the now worthless Stablecoin. Hodlers of LUNA on the Terra Classic platform were to be allocated LUNC Tokens in an airdrop.
Consequently, the new forks would be dedicated to the DeFi application structured like Bitcoin and Ethereum. The new tokens would be traded on the open market platform, with the prices changing as per the prevailing market trends.
Forks Are No Longer Supported in The Crypto Community
Following the Bitcoin and Ethereum forks, the Crypto community is no longer elated by splitting the Blockchain platform save for a few stakeholders such as the Terraforms Labs CEO Do Kwon. In a tweet, Binance CEO Changpeng Zhao downplayed the effects of forks by saying that they do not add any value “on-chain or off-chain.”
The Terra Luna community mostly supports the burning method to restore the value of the UST. A burn is a strategy for reducing the number of tokens in circulation to induce scarcity and shore up the price. The community believes that the sheer publicity that the UST has garnered in the last few days will attract other investors in the otherwise bear market.
In the meantime, the South Korean parliament has subpoenaed Do Kwon over the UST crash.