The cryptocurrency market had a rather gloomy period in May this year, and even the industry leader BTC experienced an unprecedented decline for the eighth consecutive week However, what made investors most excited was the UST sister token Luna set up by terraform labs, which plummeted from $85 at the beginning of the month to almost worthless In order to save the terra blockchain from extinction, the publisher has announced plans to fork out a new chain and rename the old chain Terra classic.
The latest news is that after the historic Luna token crash, a proposal for a forked Terra blockchain was approved on Wednesday.
According to the plan, the new block chain will treat the old tokens differently. The existing Luna will be regarded as Luna classic, while the newly minted Luna tokens will be distributed to investors who lost their money in the terrausd (UST) / Luna stampede event.
In addition, the biggest change of the new Terra blockchain is the elimination of terrausd (UST), the culprit of Luna's collapse.
It can be seen that as a stable currency, terrausd (UST) tries to maintain the 1:1 anchor between the currency and the US dollar through a special algorithm.
However, unlike stable currencies such as tether and usdc, ust has no US dollar assets as reserve support.
In order to avoid repeating the mistakes, the new Terra blockchain will completely give up the arbitrage space using the volatility of Luna tokens.
When the crypto token crash occurred on May 8, ust with a market value of $2 billion was run and sold for hundreds of millions of dollars.
With the decoupling of ust to $98, the exchange mechanism between terrausd and Luna tokens became unsustainable, resulting in a spiral collapse of investor confidence.
At present, the price of ust is about 8 cents, while that of Luna is only 1 cent, which means that the foam of more than $17billion has disappeared in the current round of cryptocurrency crash disaster.
After do Kwon, CEO of terraform lab, put forward the proposal and plan of "forking" Terra blockchain on May 16, the community finally voted on Wednesday. If all goes well, the new Terra blockchain will be officially launched on May 27.
Official website twitter account @ Terra_ Money wrote: "with overwhelming support, Terra ecological community voted for proposal 1623, calling for the establishment of a new blockchain to protect our community".
However, before the collapse of terrausd (UST) led to the bifurcation of blockchain, Ethereum also took highly controversial hard bifurcation measures in 2016 to resolve the 3.6 million eth (current price $50 million / present value $7 billion) looted by a hacker through Dao.