Proposed Recovery Plan (Proposal 1597)

Governance & Proposals
22

Absolutely best proposal yet. Really hard to get through all the noise forum posts and even worse actual live voting proposals on Terra Station.

THIS proposal needs attention.

2 Likes
23

May want to add that staking returns designated in LUNA have been a crazy large amount given it’s inflation. Which, regarding validators they are keeping a network currently in a critical juncture running, much respect. TFL stepped in and blocked government staking and did a huge LUNA stake, which makes sense for network node security given the vast amounts of LUNA available and how it plays in node operation. Where I am going with this is should LUNA inflation be brought under control, then perhaps some or all or only TFL’s LUNA emissions after time of intervention and locking the staking mechanism be slated to be burned or reserve or other use - could be determined by community vote.

1 Like
25

Great proposal and integration of other proposed ideas. It’s a mess out here, but I agree with your sentiment about keeping the brand and working towards rebuilding it. Forking it probably won’t gain any popularity with the masses due to Terra’s history of failure. All they might see is a failed project = another failed project. However, if Terra rebuilds their current system back to normal, it would gain a greater trust in the overall ecosystem. A blockchain that strives to be what it originally set out to be and to be damn good at it.

1 Like
26

Bump.

27

they, the old leaders gradually to the disaster of Luna are looking for a fork to regain ownership after running away and fooling all the investors and former holders. They continued to trick new holders into trying DCA to save Luna. Get rid of the fork option immediately with all your might, and boycott Luna v2 if it ever comes out because they’ll be printing Luna 2 and taking advantage of the community again.
The most important question right now: Where are the Bitcoins and Luna’s reserves and the Luna leaders are responsible for the destruction of the reserve and decided to print Luna on these investors.t

28

If that spammer jumps on here ignore them. Someone’s writing posts intentionally to get flagged, which if flagged enough then threads get closed and censored.

Ignore them instead let them up the reply count while bumping the proposal up at the same time.

29

Hi @R124 ,

Sorry, I reached the maximum posting the other day, and was off on Sunday. Here are the current market caps of both currencies (as of 5/16/2022 - LUNA [1.2B Market Cap] + UST [1.4B Market Cap] + LFG[~9.7M Bitcoin On Hand + potential other assets equivalent to 130M?] + Community Pool[?] - Loans and Debt[?] ):

I did notice that Multichain has put up an application and mentions the Terra Compensation Scheme. I am not sure if that has anything to do with the official TerraForm Labs’ proposal, or not, but if this does, and that proposal carries that would also affect reserves (although at that point it would be a rebrand and a hard fork):

I believe it is doable, it just has to do with scale. It is troubling that in the past few days a 5B combined market cap has started to dwindle down to a 2.6B market cap - but some of this may be due to ramping up for a compensation scheme.

The market cap is not cash on hand, but it is the representative value of the project. A normal project starts at $0. $2.6B dollars is nothing to cough at, particularly for a project in the state that LUNA and UST find themselves in currently. So, there is value in project, but that value is diluted due to the minting in order to burn down UST (that was done to try to keep UST stable). UST (and to a utilitarian degree LUNA) are where all the profitable monetization for the majority of projects seems to happen at.

So, the project does need money, but there are two good ways to do it. One is raise capital (either through coin sales or venture capital), and the other is to take advantage of the market cap (scale the projects down). One suggestion that I saw in the proposals, that I thought was rather creative, was to stabilize UST at $0.01 for a time (so 100 = $1), and then later move its value back to $1 and peg it there after the reserves grow to handle it (and if you are going to error in the pegging process, have it error on the high side, but be militant to make sure it does not go under the pegged value on the Terra blockchain). That is a great way to start with a lot less funding requirements, build the reserve back up (and save what is left of it, preferably over a payout scheme - or potentially a bailout coin that is meant to be 100 times UST at a specific mile marker, and staged incrementally so that it only becomes available at certain milestones in the reserves that can handle it).

My point is that it is doable (would have been better 3 days ago with 5B market cap, but really the strategy is the same). My “3 days ago” comment is meaning that once a solid plan of direction is reached, and the path forward is to continue where we find ourselves and work toward building value into not only market cap but raising the market cap at the current supply so that value per coin begins to raise - or possibly that coins are purchased and removed from the market causing a rise in individual coin value. In other words, once we decide to go forward, people and exchanges can feel more confident in purchasing the coins since they know the intent is for the long term.

To the degree that you can leverage the current funding products, the fees (although low enough to encourage trading, possibly even lowering only to what the validators absolutely need [but stepping them up as reserves are built]), move the scale down to the current value and start from there, and then take advantage of any venture capitalists that may still be willing to touch the project (as they see it is willing to go forward, and that they see sound financial principles going into the project where their stake in the project or an organization that compliments the project would leave them in a position to exit profitably in the next 2 years).

I get that the easy way for a company such as TerraLabs is to wind it up, and reconstitute the technology into a different project. They monetize this project - and the idea of having to fight tooth and nail for little gains in not going to be attractive to them, or any angel and venture capitalist that has put money into the complimentary organizations or have themselves bought into the Governance community via LUNA. However it will not be fun for them, quite frankly, to have to face venture capitalists in a 2.0 project where they have to own the damage they have done to their reputation, and others, either - except maybe with cut throat capitalists, or loans, and you don’t want that kind of funding anyhow - the strings are literally “an offer you can’t refuse…” kind of offer.

In all honesty, I think this is the best path forward for everyone to eventually realize the recovery of funds in the mid to long run, and for the healthiest process in the long run. It is not an easy path forward, nor a short one. It may not be the only path forward, or the only path to some sort of recovery of funds - I admit that.

I hope that helps out :slight_smile:

30

Good idea, the 3% tax has some negative effects. Can we establish a fund to reward those new and excellent projects every month to attract more people to use the luna ecosystem?

31

Hi @xplutomoonchild ,

Thank you for your thoughts, and your kind words.

I see only one reason for a hard fork:

  • Two competing communities want changes to the protocol that will not be compliant with one another. Most times these deal with competing monetary systems (either broadly, but in most cases on a more narrow topic within a broad monetary system policy).

I think some discussion has seemed to think that you can just make the fiduciary responsibilities go away if you fork the chain at a specific block. I guess that could technically work, but it certainly can’t legally work nor is it in the best interest of the LUNA community (either fiduciary or legal).

Changes to the protocol can happen without needing a hard fork (unless it comes down to the point above). If it did come to a hardfork, something like Bitcoin and any of its hard forks, where one community would fork at the point before the crash with some changes, the other maintains the current blockchain and protocol with some changes. All coins are seen as incentive giveaways (since there really is no value in the project), and as soon as trading happens in the new hard fork (or whichever fork is not retaining the reserve funds or trust), everyone looks to sale, the value will move down as the market corrects for the fact that there really is nothing behind those coins in terms of reserve, or trusted store of value (unless someone steps in to put up a reserve). Trust takes time for a store of value.

If they try to hardfork to get out of financial responsibility, I doubt a hard fork is going to work to get them out of legal obligations.

Thank you so much for your response, and letting me process through a few observations out loud in writing (since your comment got my mind to thinking).

I hope you are doing well today :slight_smile:

1 Like
33

Hi @FaeLightCarmenum ,

I have to admit that I am not as versed on the particulars of the staking side (my focus, even in the white paper has been on the supply / demand issue so far). I think my proposal is meant to deal with two issues:

  • Determine if TerraForm Labs will go forward, and if not, to come up with a way for the Governance community to take the project over (for those areas that would be legally appropriate)
  • Address immediate monetary issues that caused problems (the mint / burn rate, and the reserve)
  • To leave it open for who takes charge on day-to-day basis management (whether it continues to be TerraForm Labs or someone else outlined in the proposal selected by the community) to make changes as needs arise at the broad direction of the Governance community. If it is TerraForm Labs, I realize they have other voices in their ears right now too - particularly those venture capitalists that may have put up funding, however, depending on if those came in through TerraForm Labs, or the Foundation, they may have come in through the ICO mechanism LUNA (in which case they are in the same boat, or have written it off as a loss already).

I would be open to short term necessary items you feel could strengthen this proposal, and I can think them through from a monetary policy side as I contemplate it in comparison with the white paper to see what the drawbacks could be - but anything at this point that alleviates pressure on key components of the system such as validators, and encourages revenue (such as coin sales) is a definite plus, and I would love to incorporate them into this proposal if you think it would be helpful.

Thank you so much for all your help, and insight.

I hope you have a great day :slight_smile:

1 Like
34

Hi @Random ,

Sorry, I hit the limit on Sat. for posts, and then was off on Sunday.

I think part of the proposal I made included a light weight framework for day-to-day operations if TerraLabs chose not to go forward with this project as it is, as well as to have them definitively state their intent (and particularly if they want the community to wind down, that takes a vote from the Governance community - and that does not get lost in the process).

I do think though, that regular communication daily (at minimum) in times of crisis is definitely a good management principle. I will put that in to the proposal (and feel free to push back and let me know of specific points, or reasons for others, and we can process through those as well, and if they need to go in, then I can put them in).

Thank you for all your work and thought - I really appreciate it.

I hope you have a wonderful day today :slight_smile:

1 Like
35

Hello and thank you for your insights as well. I’m less graceful being quite shaken in spirit regarding recent and current events.

Really, has prodded some thinking and thank you for engaging.

36

Hi @MagicalTux ,

Thank you for your kind words in regards to the proposal (if you were referring to this proposal - although I realize you may also have been referring to the proposal that @HelloThere was proposing too, which if so I agree he has done a valiant job at pulling together community thought).

I can not see a way that UST holders will be able to recover fully without staying with the project. I do not oppose a discount buy back with the exception that once you do that, you begin to deplete even further the reserves, and the chances of success in building back from the current economic scale of the value of the project. For me, the importance is not the projects sake for the project, but that mid to long term I think this will actually enable recovery of value and potential growth for all current holders of LUNA and UST.

The monetization portions of the project pretty much require UST (in their current form), so to remove that, is to kind of remove an integral piece of what the LUNA communities stated mission has looked to accomplish.

I would agree that the one positive of a buy back from the view of TerraLabs is that it at least says “we tried to help and make things right” when they face people and investors for a restart if they were to try to do a V2 (and in truth, it really may be motivated out of care for people, and the hardship that this crash has caused, although I am sure that the trust issue is in the back of everyone’s mind). A V2 could be rather difficult on them, and may not help the trust issue as much as working through and rebuilding may (although I do think it may appeal to those that are just hoping to get something back).

I also wanted to let you know the formal proposal Proposed Recovery Plan (Proposal 1597) is open for vote (for those who have LUNA staked):

I hope you have a great day today :slight_smile:

37

Hi @FaeLightCarmenum ,

Do you have any specifics that you feel could be beneficial for the validator portion of the project that should be addressed in the short term? If so, I would really appreciate any feedback you have.

Thank you so much again :slight_smile:

38

Honestly I am not the best to answer, rather seeking answers myself as the idea occurred to me. I come from a user of the ecosystem’s / investor’s perspective. Though I have programming and relatable tech skills I have never worked for any block chain project and viewed a few subroutines here and there in a curious cursory way of Terra chain’s code. I could deep dive analysis but lacking economic skills among others, I would still have more questions.

39

Hi @MagicalTux ,

I thought about your thought provoking question over the weekend.

I found that the governance community is not a personhood organization, meaning that it is an association with a trustee that acts on behalf on the association. In this case TerraForm Labs documentation considers the Terra Commuinity Trust a trust with legal obligations back to the governance community. In this type of consideration, the trustee becomes legally liable (not the governance community). See:

There are numerous places that represented LUNA as an ICO for initial funding purposes.

If a coin is an ICO, even for initial fund purposes, then it will be equated as a security (similar to stock).

So, if the dilution was for personal benefit (and LUNA is an ICO - even if the initial offering is over), then there is definitely standing for monetary damanges (standing means that you have the ability to have the case heard, it does not deal with the merits of the case which come after standing is established). Since the LUNA governance community is an association without personhood, that is operating through a single trustee, then TerraForm Labs and/or Do Kwon would be the one left bearing the responsibility for any legal liability (which is kind of harsh, but that is how their documentation says they organized it).

Legally if they diluted the LUNA market for personal gain, that is a breach of fiduciary responsibility. I believe this would be true in organizational law in South Korea and Singapore.

If, however, they diluted the LUNA market in an attempt to serve the governance community by attempting to keep UST pegged, then since UST appears to be required for many of the projects monetization, and as long as the community trust is who benefits from that monetization then they would be seen as meeting their fiduciary responsibility. The LUNA would be seen as a security, and similar to a company that loses underlying value the result is that it ends up diluting the value of the individually held stock - the same would be true in this situation, in an attempt to mint in order to purchase UST which is then burned and removed (as a way of purchasing and balancing) it diluted the supply of LUNA.

However, if the monetization mainly benefits a separate legal entity such as TerraForm Labs, and/or if their foundation is a separate entity - then the Terra Foundation Guard, then it would be seen as not serving the best interest of the governance community, and this would be a breach of fiduciary responsibility.

I already mentioned the “savings account” product, which I think has its own legal liabilities (and may have evaded banking laws).

An attorney that deals with International law in terms of business, treaty, and securities would be able to fairly quickly determine if there was standing, and merit (and to what degree), and if it is actually worth pursuing.

These were just a few thoughts, although I am definitely open to the fact that I may have holes and blind spots, and places in my processing that need correction.

It is still a thought provoking question.

2 Likes
40

Just a reminder that proposal is open for voting

1 Like
41

Bumping the reminder that this proposal is open for voting.

44

I think the strategy is as follows:

Create a new chain and airdrop any legacy holders. Then it can be claimed in court that everyone was compensated. This is part of the basis for a legal defence being prepared in advance.

45

Obvously yes, he will use such wording of compensation for self-defence.
However, the fact that any project could go in market turbulance, but that not means that he should do such frĐ°ud instead of taking real action to improve the situation in existing blockchain (burning of 1B UST, increasing trn fees - as per proposal #1273 and this one)