Vitalik Buterin urged Terra to focus on the poorest 99.6% of wallets to allow for the full recovery of its investors. Even though he did not ask for regulation, he highlighted that potential hedges, like financial deposit insurance, might help.
Vitalik Buterin, the CEO of Ethereum, expressed his support for the proposal of Terra to prioritize the compensation of small investors. He considers that this would allow them to fully clear 99.6% of wallets and stabilize the feeling of the community.
Do Kwon, the founder of Terra, is working on a plan to help UST and LUNA holders. The executive said the Terra community must rebuild the chain to maintain the developer community and ecosystem.
Curiously, Changpeng Zhao, the CEO of Binance, described the proposal as wishful thinking, saying it is impossible to reverse all transactions.
Vitalik Buterin Expresses His Position on the Collapse of Terra (LUNA)
Buterin stated that every small investor affected by the drop of the stablecoin of Terra should recover. As precedent, he cited the USD 250,000 from the Federal Deposit Insurance Corporation (FDIC).
To better understand, the FDIC is a federal agency that dates back to the 1930s. That regulation amid the Great Depression represented the first time the government-supported bank deposits in US history.
Terra fell apart last week when its algorithmic stable coin TerraUSD (UST) crashed well below its parity of USD 1. In addition, the price of its sister token LUNA drastically dropped to almost zero.
As a result, the demise of UST and LUNA wiped out the savings of many investors. In that regard, Kwon proposed a plan to repair the damage caused by the collapse of those crypto assets.
The South Korean developer said that Terra should help its investors recover their remaining funds. Vitalik Buterin agreed with his proposal if he made some adjustments.
The CEO of Ethereum explained that Terra could make that group 100% complete if they only targeted the poorest 99.6% of wallets.
He added that he supported coordinated sympathy and relief for average UST smallholders. He said an influencer told them about 20% US dollar interest rates but pointed out it was their responsibility.
Other Proposals Related to the World of Crypto Assets
Vitalik Buterin did not explicitly ask for regulation but highlighted that potential hedges, like financial deposit insurance, could be helpful.
He mentioned tighter regulation for low-income employees and a more determined approach for the wealthiest in Singapore Employment Act. The legal document only applies to workers earning over USD 4,500 and employees earning a basic salary of no more than USD 2,600.
Billy Markus, the co-founder of Dogecoin (DOGE), stated that Terra should use already funneled funds to pay the victims of their failed protocol. He said that this was more convenient than using money from new investors.
LUNA is trading at around USD 0.000176 and has accumulated an 11% loss over the last 24 hours. While its daily trading volume is above USD 679.41 million, its market capitalization is about USD 1.15 billion. It occupies 58th place in the cryptocurrency ranking, according to CoinGecko.
By Alexander Salazar
