Terra's revised recovery plan would reduce post-attack UST holders' allocation

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Terra's revival plan has been updated three times. This includes raising genesis liquidity, implementing a new liquidity profile, and reducing allocation for select investors.

After a trying two weeks for the Terra community, the project's staff has announced changes to their projected Terra (LUNA) and TerraUSD resurrection plans (UST).

Terra revealed three important changes to the proposed Terra restoration and redistribution plan in a tweet. The genesis liquidity has been increased, a new liquidity profile for pre-attack LUNA holders has been introduced, and the distribution to post-attack UST holders has been reduced.

1/ We have published an amendment to Proposal 1623, incorporating the community’s feedback since its publication 2 days ago. Please see below for details 👇https://t.co/liISBn3Baa
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) May 20, 2022

Initial liquidity parameters for pre-attack Anchor UST (aUST) holders, post-attack LUNA holders, and post-attack UST holders have been changed, according to the release. The rise will be from 15% to 30%, which Terra claims will "mitigate future inflationary pressures" while also increasing the token's availability during the launch.

Aside from that, wallets with fewer than 10,000 LUNA will receive the same liquidity as the other groups. Furthermore, 70% of their LUNA will be invested over the course of two years, with a six-month cliff. Terra believes that with this new liquidity profile, tiny token holders will have access to similar initial liquidity.

Finally, the allocation for post-attack UST holders was reduced from 20% to 15%. This "dpeg related allocation is on par with the initial stakeholder (pre-attack $LUNA) allocation," according to Terra. The 5% will be transferred to the community pool.

The community has cause to be skeptical of algorithmic stablecoins in the aftermath of the UST collapse. Purely algorithmic stablecoins, according to university assistant professor Ryan Clements, are "inherently weak" and rely on multiple assumptions that are neither certain nor guaranteed to be stable.

Meanwhile, some have attempted to defend crypto as others exploit the UST collapse to criticize the entire sector. Huobi Global co-founder Jun Du told Cointelegraph that "one bad apple in the near run will not damage [the] long-term demand for crypto."

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