Buterin urged Terra to focus on compensation to small investors

by in Cryptocurrency News

Buterin

The recovery plan for lost funds due to the collapse of the Terra project should give priority to holders of small amounts. This opinion was expressed by Ethereum co-founder Vitalik Buterin.

On May 8, the algorithmic stablecoin TerraUSD (UST) lost its peg to the US dollar. This happened against the backdrop of an outflow of assets from the Anchor protocol due to a decrease in the rate of return on deposits to 17.87%.

On May 10, the quotes of the asset fell below $0.62. The fall continued on May 11, after which the LUNA cryptocurrency used to issue UST fell to $0.3. At the time of writing, UST is trading near $0.136, while LUNA is trading at $0.0002 (CoinGecko).

Buterin supported the idea of ​​one of the Twitter users under the nickname PersianCapital to compensate for the losses of investors. The latter noted that 1,000 Anchor wallets (out of a total of about 256,000) own 82% of the entire UST supply. The "poorest" of these addresses holds approximately 955,000 UST.

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PersianCapital noted that a proposal to use the $1.5 billion reserve fund to recover user funds is being discussed at the official Terra forum. This amount is not enough to fully compensate all investors. However, focusing on the 99.6% of the “poorest” wallets would allow them to recover all their losses, PersianCapital said.

“I strongly support. Coordinated participation and assistance for medium and small UST holders, who were told nonsense about the “20% rate on the US dollar” by the influencer. For the rich, personal responsibility and regret for losses,” wrote the co-founder of Ethereum. Continuing the topic, Buterin recalled that a similar approach to compensation is implemented in the FDIC insurance system in the United States. In the event of bankruptcy of financial institutions, 100% reimbursement is guaranteed for deposits up to $250,000.

“Unrelated, but curious, is Singaporean labor law: increased protection for low-wage workers and a stricter treatment of the wealthy. In my opinion, these things are good hybrid recipes,” he added.