This plan aims to expand on Do Kown’s plan while more accurately matching the distribution to the investment and commitment to the Terra Ecosystem. For any plan, some will deem it unfair for some reason or another. We cannot let that fact stop us from implementing an ecosystem for everyone to profit. The Terra community and network of apps are too exceptional to abandon.
Using Do’s plan as a starting point, the transaction history for all Terra addresses will be processed to determine distribution amount.
Validators should reset the network ownership to 1B tokens, distributed among:
400M (40%) to Luna holders before the depegging event (last $1 tick before the depeg on Binance should be reasonable for snapshot block), bLuna, LunaX and Luna held in contracts should also be recipients, minus the Terraform Labs account at terra1dp0taj85ruc299rkdvzp4z5pfg6z6swaed74e6. The new chain should be community owned. Preserving decent ownership of the network in its strongest believers and builders is important.
100M (10%) Luna buyers after the depeg and before the halt – last minute marginal Luna buyers should also be compensated for their role in attempting to provide stability for the network. This tranche should be implemented as a sliding scale depending on entry price and the post purchase activities. Higher Luna entry prices not only require larger investments they also have a higher impact on peg maintenance as more liquidity is provided. For example, entering at 1/2 of the Luna prepreg snapshot price and holding until ¼ of the snapshot price results in a quarter of the loss of someone holding from the snapshot until halt. The token distribution should aim to represent this as well. However, not all trades will qualify. In other words, the Luna token distribution will recognize attempts to support repeg and will also recognize when the attempt is abandoned. Repeated peg arbitrage trades that result in a loss should also qualify considering the strong commitment to recovering the peg.
Luna buyers after the halt will not receive tokens in this plan. After the halt, the peg mechanism is known to be no longer running. Buying at this time is not defending the peg and is of little benefit to the ecosystem. Additionally, extreme amounts of Luna can be accumulated with very little investment. The priority is to repair the original investors and the supporters of repeg.
Marginal Luna Buyer’s Distribution Math:
The aim in distributing in this tranche based on commitment to recover the peg.
Qualifying Portion = (Qualifying Luna Investment) – (Negating Redemptions)
Qualifying Luna Investment = (Number of Luna Tokens bought) * (average entry price)
All Luna investments qualify including derivatives/staking tokens, bLuna, Lunax etc.
Negating Luna Redemptions = (Number of Luna Tokens sold) * (average exit price)
All Luna Sales will negate except for trades to Luna derivatives and staking tokens such as bLuna.
Token Distribution Amount = 100M *(Qualifying Portion / Sum of all Qualifying Portions)
250M (25%) to UST or derivative/staking (ie aUST etc) holders before the depegging event. UST holders that held throughout the depegging until halt are the strongest supporters of the ecosystem. They have the highest cost basis for UST need to be made whole as much as possible as they did not contribute to the UST liquidity surplus crisis. This should include UST ported to other blockchains such as ETH, Fantom, AVAX etc.
150M (15%) Any UST at the time of network upgrade, to proportional net investment. This will provide a potential future value basis, justifying continued holding UST.
UST Distribution Math for network upgrade tranche:
Qualifying Portion = Qualifying UST Investment
Qualifying UST Investment = (Number of UST Tokens held) * (average entry price)
All UST investments qualify. Pre-depeg UST holders will have: average entry price = 1. UST purchased after depeg will be subject to the entry price adjustment in transaction history.
Token Distribution Amount = 150M *(Qualifying Portion / Sum of all Qualifying Portions)
100M (10%) to the Community Pool to fund future development.
All Luna besides the fourth tranche should be staked at the network genesis state.
The network should incentivize its security with a reasonable inflation rate, say 7%, as fees will no longer be enough to pay for security without the swap fees.
Terra does not control centralized exchanges. This plan will be given to them and the appropriate tokens delivered to their custodial wallets but it shall be the responsibility of the exchange to execute distribution correctly to their clients.