Vitalik Buterin urges Terra to compensate small UST holders first



Vitalik Buterin, the co-founder of the Ethereum network, has said that the Terra project should work closely with small holders to ensure they are compensated first during the proposed reimbursement plan.

Ethereum-co-founder wants Terra to compensate small holders

The Terra network has been dying since UST started collapsing last week. The value of LUNA has dipped by around 100%, and the Terra USD stablecoin has lost its peg, and it is currently priced at $0.16.

Investors in both LUNA and UST have suffered immense losses, and the community is currently looking at rebuilding the ecosystem and providing compensation to investors that lost their money following the collapse.

One of the community proposals said that if the UST is pegged again, the objective was to reimburse the initial deposits of small holders and figure another way out later to sort large investors and creditors. The payout for UST holders is estimated to cost between $1 billion to $1.5 billion.

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Buterin said that compensating small holders first was a good idea, saying that small investors should be reimbursed first because they need the money. he also added that whale investors can manage the losses made.

“Coordinated sympathy and relief for the average US smallholder who got told something dumb about 20% interest rates on the US dollar’ by an influencer, personal responsibility and [sorry for your loss] SYFL for the wealthy’” he said.

Proposals for Terra’s recovery

While the co-founder of Terra, Do Kwon, has shared a recovery plan for the network, there lacks a clear decision on whether the plan is for the network to rebuild or compensate for the losses suffered by investors.

Besides compensating smallholders, another proposal involves releasing a hard fork upgrade for the Terra network named “TERRA 2.” The network is also planning to release a liquidity pool that will bring the value of UST back to $1.

However, the hard fork option has been opposed by the founder and CEO of Binance, Changpeng Zhao, saying that “forking does not give the new fork any value. That’s wishful thinking.” Zhao also questioned how the Bitcoin bought by the Luna Foundation Guard to back UST was used.

The co-founder of Dogecoin, Billy Markus, also called out Kwon, saying, “If they wanna pay off the victims of their dumbass failed protocol, instead of using new money from new victims, they should use the money they already funnelled from investors to pay them back.”

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