As we all know by now, Luna has been completely decimated by a combination of a bank run and what is mostly described as an attack on the chain. Through a combination of arbitrage trading and milking the blockchain mechanism used to peg UST with Luna, we have Luna literally heading to zero.
At the time of writing, the blockchain is getting toasted and there's no hope in sight. As if Luna isn't bad enough, the plans to get UST back to the dollar peg constantly failS, as the "stable coin" currently trades at 18 cents.
In a fascinating publication on Cointelegraph that discusses how CZ intends to help Luna's cause, there was some talk about a potential half fork. The conversations surround what Groovy on Twitter describes as a rekt drop.
Basically, the plan is to create a new blockchain called Terra 2, that will be based on a backdated snapshot. According to the publication, the snapshot will offer a new version of Luna to people that held Luna before their system imploded.
In other words, if you got some of the recently minted Luna by the system, you absolutely don't matter. So, in other words, Terra is proposing giving a middle finger to everyone that actually took a risk on their risky and useless asset.
Middle finger
This is a fascinating hard fork because, most times, when a new chain comes along, it is because of a dispute and not simply because you want to kick out people that invested when you were at your lowest. Alas, that's what is being proposed.
CZ reckons that it is a terrible idea and asserts that this move will not create value. Instead, it will just take away value from people who actually willingly took a risk on your asset.
Also, I'm pretty certain that if a new chain is forked out of Luna, and Luna2 is airdropped to the early investors, they'll just dump it to oblivion to cut their losses. It is the sensible thing to do.
Also, what kind of precedence would Terra be setting if they really just fork away from investors? I mean, why should they ever be trusted again?
Don't get me wrong, I know that hardforks are in the code and the terra blockchain governance can fork to protect the chain if it is required. However, forking away investors is a very shitty move.
The reality is that the validators on terra need to work out a new path for the blockchain and figure out how to use their Bitcoin reserve to get the peg back. Subsequently, Terra should also find a way to ensure that the algorithm is in tip-top shape to prevent future attacks.
My sentiments are kind of mirrored by CZ of Binance who has also described the events surrounding Luna as a watershed event that has imbued a sense of resilience in the market.
Forking away new investors that supported the project is going to lead to even more backlash in the future. Confidence in whatever comes after will be even lower than it currently is, no matter how they try to sugarcoat it.
Then again, with the support of billionaires like CZ, and other venture capitalists in the background, a fork that definitely works in their favour will be wash traded and pumped to infinity. As they say in showbiz, the Ponzi must go on.
