The LUNC community funded the creation of the Terra Grants Foundation in hope TGF would provide the valuable service of attracting and supporting developers to work on the Terra Classic blockchain. However, after almost six months and over $100,000 of community pool funds spent, many in the LUNC community are wondering what TGF has accomplished to date.
Therefore, we ask the Terra Grants Foundation to honor its promise to be “100% transparent” with us. Specifically, we respectfully demand TGF provide the following information:
A complete accounting of TGF’s receipts and disbursements, including the corresponding blockchain transactions. We do not request any donors or grantees be doxxed, however the accounting should include some identifying information for each transaction. For example, LUNCDAO and LUNC Development Fund have pledged to donate a portion of their staking rewards to TGF, so the accounting should identify which receipts originate from LUNCDAO/LDF. The accounting should specify which disbursements were paid to which particular developer. Etc…
A complete list of the monthly salaries for all TGF employees/administrators/anyone affiliated with TGF who received community pool funds.
A complete explanation of the “potential legal risks” which prompted the Agora thread titled “Legal Representation for the Terra Classic DAO.” The explanation should address the specific rationale behind the proposal to dissolve TGF and reform in the Cayman Islands.
We will proceed with a formal governance proposal to demand the foregoing information if TGF fails to provide it in this thread. However, we hope a vote will not be necessary, and instead TGF will take this opportunity to “showcase their goodwill” to the LUNC community by honoring their promise to be 100% transparent.
I support this idea. We need to know what is happening with our funds and that they are being spent appropriately. Based on current projections and how there’s zero grants since TGF inception the funds are not being used in a very transparent way. Let’s hope @ek826@LuncBurnArmy have some explanation. But most likely they do not.
However, after almost six months and over $100,000 of community pool funds spent, many in the LUNC community are wondering what TGF has accomplished to date.
Let me correct that statement, TGF has spent $24,982 since inception 6 months ago. This report was publicized several weeks ago, which describes what has been accomplished to date.
Terra Grants Foundation Update
On November 4th, the Terra Grants Foundation proposal successfully passed governance and began its work to identify needs in the Terra Classic ecosystem and assist in proposals, governance, and accountability. In this project summary, we outline our activities since its inception month by month, provide updates on initiatives, budgets, and present next steps for the TGF.
November 2022 Summary
Terra Grants Foundation proposal passes governance (11/4)
Addition of Program Manager Marco Ferreira
Program Advisor David Coyne identified as a volunteer
Terra Grants design and website started
Design and Logo finalized
Important initiatives discussed and feedback solicited
Terra Classic Recovery Acknowledgement Opportunity Governance Proposal
November 2022 Detailed Report
The goal of the TGF was to identify needs or deficiencies within the Classic ecosystem, broadcast these perceived needs to the community, and bring calls to proposals/proposals to governance, and provide a level of accountability to community spend proposals.
The first task was to build a team who would contribute to the realization of its goals. The first addition was Marco Ferreira, who assumed the position of Program Manager. Ferreira brought a wealth of experience and has developed various programs including a high degree of Federal, State, and Local government partnerships and the management of successful multi-million dollar grants. Shortly thereafter, David Coyne joined the organization as a volunteer Program Advisor. David has driven double digit revenue growth in key business segments, launching national campaigns that brought new consumers into the brand portfolio.
Design and Development of TGF Website and materials
This process entailed the development of a website design and logo that could convey the organization’s mission and values. The logo manual is as follows,
For individuals that would need to use the logo, it is available upon request.
The Terra Grants website was launched on November 22, 2022. The website serves as a comprehensive resource for those interested in learning more about the foundation’s work, offering a platform for keeping up to date with the organization and its various initiatives.
Please see the section on Initiatives for updates on the above.
Recovery Acknowledgement Opportunity
The first initiative that was acted upon was the Terra Classic Recovery Acknowledgment Opportunity. The idea of this opportunity was to bring unity to the community at a critical stage of growth and building by acknowledging and rewarding past commitment to the development of the blockchain.
The discussion on this opportunity was posted here,
And ultimately this governance proposal on the Recovery Opportunity was initiated and passed. For an update on this initiative, please see the section on initiatives.
December 2022 Summary
Recovery Acknowledgement Proposal Paused
Discussions Initiated with Binance
Grant Application to the Industry Recovery Initiative
Internal Grants Processes Refined
Standard Operating Procedures Refined
Ad Hoc Grant reviews
Additional Terra Classic Initiatives Identified
Terra Grants Github Created
Research on Fees Disseminated
L1 Development Team Proposal
December 2022 Detailed Report
While governance passed the recovery acknowledgement signaling proposal, the initiative was paused in December after a number of events, including the passing of proposal, 10983 and 11111. Ultimately, the issue we were facing at this time was an announcement that the core development group at the time (Terra Rebels) would no longer be volunteering to maintain the blockchain, and that further maintenance would require payment. Proposals 10983 increased the seigniorage back to the community pool as a response; however, was repealed by proposal 11111. Thus TGF decided to pause the Terra Classic Acknowledgement Opportunity for a later time until 1. Clarity could be obtained on new L1 development, and 2. The chain was sufficiently capitalized to support this initiative.
As part of governance proposal discussions related to community driven proposals 10983 and 11111, TGF responded by initiating conversations with Binance around the seignorage reward weight parameter and discussions around total supply. There are many factors that affect the total supply of tokens in the system. There is the on-chain tax (0.2%), there are token inflation parameters (currently 0%), seigniorage (10%), market swaps (disabled for LUNC/USTC, enabled for USTC/Other stables 0.35% tobin tax), pre-determined vesting schedules, and there are voluntary burns, like the one Binance and other members/validators have been generously contributing.
Efforts by the community utilize the RewardPolicy parameter change in order to capitalize the chain and fund the community pool. In consultation with members of the community and Binance, it was clear that the co-mingling of voluntary burns with the seigniorage remint policy was confusing at best, and undesirable for others.
In addition, Binance has been engaging with the leadership team from the Terra Grants Foundation with the below requests:
To create a new burn wallet that Binance can send the LUNC spot and margin trading fees to that does not allow re-minting of the burn amount.
To whitelist Binance’s wallets (See Appendix), so that the transaction tax is not applied when transferring between these wallets.
To allow time for these new updates to take place, Binance will delay sending LUNC trading fee burn contributions until 2023–03–01 (UTC).
Binance will continue to work with the community to support the implementation of this new plan, and if for any reason this can’t be done, Binance will consider withdrawing the burn contribution going forward.
The following proposals, changes in development models, and falling token prices resulted in a lack of capitalization of the community pool. In response, TGF engaged in outside funding opportunities for other avenues.
Grant Application to Industry Recovery Initiative (excerpt)
Funding amount sought
I am asking for $5M USD to be earmarked towards Luna Classic projects, where the Terra Grants Foundation would issue RFPs, evaluate projects, and utilize these funds to issue smaller grants or loans to projects.
The grants foundation would run two cycles of funding in a year. Each cycle would offer $2.5M of funding and applications would be evaluated by independent evaluators as well as the grants foundation.
Preferred form of capital (equity, debt/loan, convertible)
There is no preferred capital — it can be negotiated with the individual projects at a later time. I believe most projects would be amenable to some sort of equity share with input from IRI. If a loan is preferred, we would adapt the mechanisms of the grant program to adjust accordingly.
Financial model demonstrating path to profitability assuming capital injection
One of the goals of the IRI is to restore confidence in Web3. Terra was the largest digital collapse next to FTX, but while FTX ( a centralized exchange) will di)e, Terra can live on. In fact, the revival and success of Luna Classic might be one of the best ways to instill confidence in DeFi. That is the goal of the Terra Grants Foundation. Our goal is to invest the resources at our disposal as wisely as possible to incentivize projects back to the chain, and bring users to use these services, projects, games, and utility.
The majority of the burn is CEX related transactions, and the key to profitability is the increase in on-chain transactions. I am confident that if we micro-invest into Luna Classic, we can return value to the IRI investors of our project, bring utility and profit back to the chain, and restore confidence in Web3.
This application was submitted in December 2022 and we have received notice that application was received and under review on March 3, 2023.
If the TGF were to receive outside funding we began to refine its internal grants processes with the goal to create a more efficient system that can identify and allocate funds to projects that have the potential to generate a meaningful impact. This has involved reviewing and adjusting the standard operating procedures (SOPs) to ensure that each step in the process is streamlined and well-coordinated, ultimately enabling the Foundation to better serve the Terra Classic ecosystem.
Ad Hoc Grant Reviews
As noted by the original TGF proposal, this grants program does not prevent the submission of any community pool distribution on its own. In December, two community spends were independently proposed, one of which was around an L1 Dex. Due to the complex nature, several people requested that TGF perform and adhoc review of this proposal. Given the proposal was independent and also already in the voting stage, we initiated a fast review and obtained 2 (of requested 5) reviews. These ad hoc reviews were shared with the proposer. We also performed a review of an unsolicited grant proposal and obtained 1 (of requested 5) reviews. This was shared with the proposer.
Additional Initiatives Identified
Finally, we identified three more important initiatives from community sentiment. The three initiatives were,
Accurate polling of community sentiment
Depleting funds from the Oracle pool
Need for L1 upgrades to Terra Classic
Polling app— At the time, there were three main sources of engaging with the community and gathering community sentiment — discord, twitter, and agora. The issue with all of these polling methods is that they do not accurately reflect the sentiment of the governance stakeholders of LUNC (the delegates and validators on the chain). Thus, we began to work on a polling application that would function in a similar way to on-chain governance. A github repository was created and a preliminary implementation of a polling app similar to that in terra station was created.
Ultimately, we decided to go in a different direction (see initiatives section) and the project was archived.
Depleting funds from Oracle — For the Oracle pool, a sense of urgency had spurred discussion and development. One common statement that I heard in the LUNC community is that the oracle pool will run out in the next 2 years. If we plot the above distribution over the period of 10 years, this is the graph that we see. There is a pretty steep drop early on in the first year and a tapering off as time goes on. In fact, the reward algorithm asymptotically approaches zero (meaning the Oracle pool will never run out), and continues on well past the 2 year mark.
If you would like to verify this solution, please see the code used to compute this distribution and full dissemination of our findings in the following article.
Need for L1 Upgrades for parity— The final initiative in the month of December revolved around the announcement from the Terra Rebels developer group that there would be no more volunteer work done on the chain. In response, we initiated discussions with developers in the community on how to best move forward and put forth a proposal for an L1 development team to perform upgrades and maintenance to the blockchain. The discussion around the L1 team can be found here,
The proposal went up for voting at the end of December.
January 2023 Summary
L1 Development Team Proposal Passed
Binance Discussions Continue
Review of Policies and Procedures
Assistance with Gas Adjustment Proposals
Additional Initiatives Identified
January Detailed Report
At the very beginning of January, the L1 Development team proposal passed governance. The L1 development utilized TGF as a vehicle for payment and updates can be seen in the initiatives section.
During the month of January, we continued to engage with Binance around the burning of their trading fees. Conversations in the form of calls or messages occurred in 8/31 days in January, 19/28 days of February, and 2/31 days in March.
We also decided to perform an internal review of existing policies and procedures. This review aims to identify areas for improvement and operations. This includes recommendations on services to be performed by the Independent Contractors when Terra Grants Foundation is acting as the payment distributor. Guidelines include work methods, work schedules, and what the roles and scope of TGF is.
Assistance with Gas Adjustment Proposals
After publishing our research on the Oracle pool and informing the community on different ways to fund delegation and staking, a series of proposals was put out by dfunk where proposal 11243 increased the gas fee on Terra Classic by 5x. In the process of analyzing the effect of the proposed increase, dfunk identified a set of transactions that did seem to make sense. After investigation, we determined that Trustwallet was not computing the tax correctly, and we notified the appropriate people at Trustwallet of the miscalculation. Part of the issue is that the terra classic finder does not show the taxes separate from the fees. This was raised as an issue to be resolved by an L2 team.
Additional Initiatives Identified
Terra Station and TFL LCD/FCD
Lost Fees from the Burn Tax in September 2022
Terra Station and TFL LCD/FCD — It was during this time that Terra Station was transitioning to Station wallet. Previous conversations with Terra Rebels, TerraCVita, and Terraform Labs indicated that support for Terra Classic was unlikely at that time, and that we should plan to fork our own wallet and run our own infrastructure. TGF engaged in some of these conversations, but ultimately the transition of Station was handled by TCV and Allnodes.
On September 21st, the 1.2% tax burn was activated on Luna Classic. Transactions on testnet were successful, but transactions on columbus-5 had gas computations straddling the border of success and failure. Thus, some transactions failed and the tax was levied while the transaction did not go through.
The code to process the reimbursements has been written and can be seen in the following github repository,
A test of the distribution can be seen in the notebook on TestNet.
Distribution of the lost fees can be seen here, please note this does not apply to validator delegation fees during the September timeframe.
A previous attempt to solicit missing entries on twitter was fraught with hundreds of thousands of scam-like responses. Thus, the list scraped via chain analysis will be used as the final list. To verify the lost_fees.json list, please see the chain analysis code here.
February 2023 Summary
LUNC Mind Map
Regulatory Concerns by SEC
Additional Initiatives Identified
February 2023 Detailed Report
LUNC Mind Map
Mind Map — In January and February, we engaged more with our Program Advisor, David Coyne. In this exercise, we created a mind map to better understand the ecosystem, and how we can move forward as a developer, investor, or validator which can help us inform an overall strategy. Furthermore, TGF recognizes the need to have a comprehensive and solid strategic plan for developers, projects and investors to understand and independently request the LUNC community for governance approval and adoption.
Regulatory Concerns — On February 16, the SEC charged TFL and Do Kwon with orchestrating a multi-billion dollar crypto asset securities fra)ud. This raised a number of regulatory and legal questions in the community about the legality of ecosystem as a whole. TGF ramped up engagements with various legal counsel to gain insight into mitigating risk and what directions the blockchain can and cannot engage in.
Over the past several months, we have had initial consultations with six US-based law firms, and follow up consultations with three of them to assess their knowledge, engagement, advice, and overall fit for the Luna Classic community revitalization effort. The most important aspects we were seeking clarity on were, advice to mitigate U.S. regulatory risk, fielding questions from the Luna Classic community, and providing guidelines for contractors working from community pool spends (especially related to USTC).
Additional Initiatives Identified — 3rd Party Wallet Support
As the Terra Classic blockchain continues to decentralize and diversify, have been in talks with Keplr Wallet regarding support of the blockchain.Informal discussions with community members first began in October 2022, and are still ongoing.
As of this point, Terra Classic has already been added to Keplr’s browser extension and mobile application. Available functionality includes sends, staking, and governance.
Given Keplr is an independent third party, this support reinforces there is no centralized entity, or AP “active participant” responsible for the development, improvement (or enhancement), operation, or promotion of the network wallet or infrastructure needed to retain Terra Classic’s functionality.
The TGF team has been actively seeking funding for projects working on the blockchain. Several entities have been approached and applications have been submitted to Binance IRI, Kucoin, and Upbit. This funding would go directly to support development on the chain.
Program manager, Marco further engaged in twitter spaces, youtube interviews, and polling to gain further understanding of the needs in the ecosystem and engage with the community.
One of the most critical initiatives that we at the TGF believe is necessary for the LUNC revival is utility. We have been discussing how to best bring utility to the chain, including things like offering incentives for L2 Dapps to port their code to LUNC (when cosmwasm is upgraded). We unfortunately are again running into a limited community pool budget to provide proper incentives. In response, I have published an article about how I personally believe I can best contribute to this initiative without a budget. It should be noted that my effort on bringing utility in the form of this project was independent from my duties on the L1 or TGF.
One thing that was not clear in this article is how this would connect to LUNC. I added an addendum to the article at a later time, but many people did not see it. I will reiterate that here.
Interchain Accounts is a relatively new development in the Cosmos ecosystem that I think few people are aware of and deserves some explanation.
Inter-Blockchain Communication Protocol (IBC)
Inter-Blockchain Communication Protocol (IBC) is a protocol that allows different blockchain systems to communicate with each other. IBC is just a protocol and new functionality can be added to this protocol. One functionality that has recently been introduced is Interchain Accounts (ICA). ICA is a module built on top of IBC, specifically designed to enable cross-chain account management and interoperability. ICA allows an account on one chain to control an account on another chain. ICA streamlines cross-chain interactions, enabling developers to build more complex and feature-rich cross-chain applications.
Here, we can initiate an app-chain msg from the LUNC chain, by wrapping in a generic Msg format.
Summary and Updates on Initiatives
Terra Classic Acknolwedgement Grant Program (completed, details below)
Accurate polling of community sentiment (Recommendation, details below)
Report on Depleting funds from the Oracle pool (Completed)
Need for L1 upgrades to Terra Classic (Ongoing, details below)
Tooling and Utility (Ongoing)
Decentralized Exchange Protocol (Addressed by Community)
Terra Classic Wallet (Adressed by Community)
Terra Station and TFL LCD/FCD (Address by Community)
Lost Fees from the Burn Tax in September 2022 (Failed To Pass Gov)
Regulatory Concerns (Ongoing)
3rd Party Wallet Support (Ongoing, see above)
Announcement of 750 M Terra Classic Acknowledgement Grant Program
In the Fall of 2022, TGF announced the creation of its first grant program named the 750M Terra Classic Acknowledgement program. The purpose of the program was to reward those who committed their time, energy, and work, to Terra Classic blockchain. Without their support, the LUNC blockchain may not be where it is today.
With the grant application announced on TGF’s website and through Twitter, TGF collected 18 applications in the various categories:
TGF created two Grant Review Committees to review the 18 submitted applications. One committee reviewed all 8 Community Ambassador applications and the 2nd committee focused on reviewing the 10 applications from Validators, Projects and Developers. TGF created an asynchronous viewing ability for each committee member to score each application. Once all of the independent scoring was performed, TGF’s Program Manager hosted a final scoring review committee meeting with all committee members in order to finalize all of the scores, talk about each other’s scores, and come up with a final consensus of awardees.
As of February 2023, TGF has completed the 750M LUNC Acknowledgement grant program and its grantees and awards are slated to be announced in the 2nd quarter of 2023. The actual amount recommended to be awarded is much less than the 750M. TGF is very sensitive to utilizing community pool funds since there are major demands of Layer 1 support and advancement, opportunities of a LUNC legal questions, USTC, and Layer 2 development activities. Once a clear path of quarter 2 development is established with an approved budget by the community, TGF will make its announcement and the total amount awarded.
As mentioned before, the issue with all of these polling methods is that they do not accurately reflect the sentiment of the governance stakeholders of LUNC (the delegates and validators on the chain). It is our recommendation to move to a different platform that classic agora. Commonwealth is a separate platform that is used for discussions for almost all of the rest of the Cosmos ecosystem,
Here, one can control access to polls and forum discussions to the stakeholders of the token. While this is not fool proof by any means, it does provide some level of protection against bots and spam accounts.
Finally, the L1 team utilized TGF as a vehicle for payment distribution. Details on the milestones and budgets can be found in the following references. Governance approved pivots, like the one below are documented and described in the resources below and various AMAs.
Bi-weekly sprints are presented and work items are approved with input with the community oversight committee.
This is a summary of spending of the TGF for the initiatives and activities over the last five months. All of the expenses out of the TGF wallet have been noted in this document, on our website, as well as fully transparent on the blockchain (Terra Finder).
One other thing to note is that TGF is not a funding vehicle by itself. As noted in the original proposal —
*The grants program does not actually fund anything, just collects proposals, organizes independent reviews, makes recommendations via these reviews, and keeps projects accountable. All community spend proposals still need to go through governance and voting by the community.
Since inception, the Terra Grants Foundation has accomplished a significant amount of its goals, while working independently to support various projects and initiatives within the community.
At this time, the remaining $10,008 (460,769 USTC) in the TGF wallet from this community spend was returned to the community pool 0BC49FD6C98F93B8D23BAA0646DD0B439E4551B57D45DE5047F90E3B642DFE47 Terra Finder.
A complete accounting of TGF can be found on the blockchain via the multisig wallet. terra1mk7qfn9u6qn2afeytlsruk7ew8emxst3cw0c5f
Memo fields indicate the indentifying information
All donations to the multisig remain - none of the donations have been disbursed, i.e. LUNCDAO, LUNC dev fund is all still there.
There is only 1 person officially in TGF - me. Everyone else is acting as an independent contractor or entity. I received a one time payment from the TGF account of 40,000 USTC (~$840 USD) for building out criteria and metrics for the project initiatives on 11/26/2022. The only other monthly costs are for the Program Manager (Marco) who was hired back in November at a rate of 160,000 USTC (~3.3k USD) per month. Independent contracts were paid for website design and ad hoc grant reviews. All of these items were governance approved items as noted in our original proposal.
“legal representation for terra classic DAO” . Everything stated about this proposal should be taken at face value. There are some wildly outlandish assumptions being made about why this proposal was posted - none of which are factual. Everything about why this was proposed is stated in that proposal. For what its worth, I can post the history of our edits of the document between me and the law firm, as well as our conversation about this very point of forming the offshore DAO. Maybe this gives a window into the thought process.
In another transaction, the TGF Kraken wallet received 36.4 million LUNC (which is not from TGFs LUNC wallet). What is the nature of this transaction? Also in another transaction, this same exact amount has been withdrawn. Where was it sent to and for what purpose?
Question about Marco Fereiras statement on Twitter
Is Marco registered as a person with significant control/a director, if this is not the case then on what basis is he interacting with TGF in regards to his creation of governance proposals?
Marco has stated that TGF has grantees established, due to the supposed transparency of the organisation and the amount of funds taken from the community, would you be able to provide us with more information about the grantees and their projects?
Marco has also stated that the Grants won’t take place until the CP is to increase. Since funding has already been sent to your wallet how is this relevant - do you plan to ask for money again and if so how much?
.It has also been stated by Marco that grants can’t be rewarded until LUNC price rises. This is hardly a guarantee that these funds will be used in a reasonable time, how long do you speculate you will hold these funds for without spending them? Would it not be more sensible to return these funds to the CP and to write a new proposal that takes into account the lower price?
In regards to the stop on grant spending above is it not counterproductive as TGF funding these projects may be the catalyst for greater growth within the community, growth that would allow more funding in the future and holding off on this spending may contribute to the lowering in price of LUNC and poor community sentiment?
“TGF has had moments to request governance approval on our award amounts but the blockchain was influx with pressing needs. Also, I have reached out personally to all of the applicants and notified about the information”. On this statement fro Marco. Can you clarify: What pressing needs does he refer to? Can you reveal a list of the applicants, as per your transparency pledge and details about these grants?
Marco provided a screenshot of an email. Email contains several statements about the TGF. Can you reply to all of these statements in detail. Also based on the information from the mentioned email. Did TGF recieve any communication from IRS?
In following messages Marco touches on doxxing the people TGF ever sent funds to. Does the TGF have details of all the developers that were involved in L1 work, does the TGF have the details of people who donated to their wallet, did the TGF recieve confirmations from donors that the sent funds were in fact a donation?
On the statement that the TGF has been communicating with potential blockchain funders - can you reveal more information?
To be clear, the request is for TGF to account for all funds under its management regardless of whether they were spent directly on TGF. Such funds include the 908M LUNC authorized for the Q1 JL1TF budget