Good News: Do Kwon Finally Addresses The Terra Community Amid UST and Luna Crash


As an update to our last article, Do Kwon breaks the silence and addresses the Terra community on a Tweeter Thread, 19 hours after tweeting that he was close to announcing a recovery plan.

New Update 5/12

He acknowledges that the previous 72 hours have been tremendously difficult on the whole Terra community. He says he is determined to work with every member of the community to weather this catastrophe, and that together, a way out will be out.

image HodlCryptonite

The Price Stabilization Mechanism

The price stability mechanism is absorbing UST supply (more than 10% of total supply), however the expense of absorbing so many stablecoins at once has increased the on-chain swap spread to 40%, and Luna price has dropped drastically as a result of absorbing the arbs.

The Only Path Forward

The only way ahead is to absorb the stablecoin supply that wants to depart before $UST begins to repeg. There is no getting around that, says Do Kwon.

They recommend a number of corrective approaches to help the peg mechanism absorb supply

A Community Proposal Is Endordsed

Terra supports the community proposal 1164 to boost the basepool from 50M to 100M SDR *), reduce the PoolRecoveryBlock from 36 to 18 and increase minting capacity from $293M to $1200M.

This should help the system absorb the UST faster.

The Pressure On The Ecosystem

With the present on-chain spread, peg pressure, and UST burn rate, the UST supply overhang (i.e., bad debt) should continue to decline until parity is achieved and spreads begin to heal.

Do Kwon remains positive about a recovery

The Terra ecosystem is one of the most active in the crypto business, with hundreds of dedicated teams developing category-defining apps. We shall emerge from this together as long as these builders, including TFL, continue to create

Do Kwon

Terra’s Focus Remains Unchanged and the community will survive

Terra’s emphasis has always been on the long term, and another setback in May, similar to last year, will not dissuade the #LUNAtics. Short-term setbacks do not determine what you are capable of, wrote on his last tweet.

We Hope The Terra Ecosystem will recover and will rise back.

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