Vitalik Buterin, the co-founder of the second-largest cryptocurrency by market cap, Ethereum, believes that the Terra project should focus on UST smallholders as part of any proposed reimbursement plan.
As TheCoinRise reported, the Terra ecosystem was seen burning to ashes starting from May 9 when its stablecon, TerraUSD (UST), depegged, losing its position at $1.
Compensation to UST holders
UST/LUNA community is currently focusing on the ways to bring back the ecosystem to its place and potentially offer compensation to as many sufferers as possible.
As we reported, the Luna Foundation Guard has decided to compensate UST holders. In one such proposal, a Twitter user suggested reimbursing all of the initial deposits of small UST holders to greatly improve general morale and sentiment, along with finding solutions on how to help larger investors and creditors.
Ethereum co-founder supported the proposal via Twitter on Sunday and noted that the focus should be on the smaller investors first before moving forward to handle whale holders. He writes:
“Coordinated sympathy and relief for the average UST smallholder who got told something dumb about ‘20% interest rates on the US dollar’ by an influencer, personal responsibility and [sorry for your loss] SFYL for the wealthy.”
While Buterin did not call for regulation, he did say that potential protections like financial deposit insurance could be valuable in these situations.
“An interesting unrelated one is Singapore employment law. Stronger regulation for low-earning employees and a more figure-it-out-yourself approach for the wealthier. IMO things like this are good hybrid formulas,” he remarked.
Strongly support this. Coordinated sympathy and relief for the average UST smallholder who got told something dumb about "20% interest rates on the US dollar" by an influencer, personal responsibility and SFYL for the wealthy. https://t.co/YfNlpvAizg
— vitalik.eth (@VitalikButerin) May 14, 2022
At this point, it’s uncertain whether the project will be able to rebuild or if it will try to recoup investor losses through a temporary rebound, however tough that may be. It’s also worth noting that the proposal linked to Buterin’s statements has been amended this week, and it now considers paying out all users up to a $50,000 per-wallet cap.