Prominent blue-chip institutions are debunking rumors circulating on social media that they had a hand in the recent collapse of Ethereum challenger Terra (LUNA) after its algorithmic stablecoin depegged from the dollar.
According to a new report by Bloomberg, massive institutional investors such as BlackRock and Citadel Securities are pushing back against the notion that they were involved in the disintegration of LUNA and its stablecoin TerraUSD (UST).
A representative of Citadel told Bloomberg that the company “does not trade in stablecoins, including UST.” Similarly, BlackRock spokesperson Logan Koffler told Bloomberg that “rumors that BlackRock had a role in the collapse of UST are categorically false. In fact, BlackRock does not trade UST.”
Terra’s price recently witnessed a massive 99% hyperinflationary downswing that saw it go from around $1.00 to $0.0083, prompting the blockchain to cease operations.
As little as forty days ago, Terra was changing hands at over $119. LUNA has dipped even further and is moving for $0.00015 at time of writing.
TerraUSD also saw a huge price drop as it depegged from the dollar, falling all the way down to $0.08 before rebounding to $0.154 at time of writing.
However, Terra founder and CEO Do Kwon says he has a plan to preserve the embattled crypto asset by reconstituting the chain and resetting network ownership to one billion tokens.
According to Do Kwon, 40% of the remaining tokens should be dedicated to LUNA holders before the depegging event, another 40% should go toward UST holders pro-rata at the time of the network upgrade, 10% to LUNA buyers the moment before the blockchain went under and 10% to the community pool for future projects.
“Why does this redistribution make sense? UST holders need to own a large share of the network. As the network’s debt holders, they deserve to be compensated for the tokens they have been holding to the end.
Terra needs a community to continue to grow and make its blockspace valuable again – the only way to do this is to make sure that token holders before the attack commenced, the most loyal community members and builders, stick around to keep providing value.
It is a hard balance – and no easy answers in redistributing value within the network. But value must be distributed to allow the ecosystem to survive, and in its current state it will not.”