Vitalik Buterin, the co-founder of Ethereum (ETH), has aired his opinion regarding the Terra project’s proposed reimbursement plan, stating that the smallholders should be first considered if it finally goes through.
It is no longer news within the crypto community that the Terra ecosystem suffered a death spiral around the 9th of May, which caused the Terra (LUNA) to dip 100% and TerraUSD (UST) stablecoin to lose its US Dollar peg. At the time of filing this report, UST is trading at $0.16.
With this major capitulation experienced by LUNA and UST, the community now looks for ways to get around the problem and get the ecosystem back online, in order to relieve many investors who crashed financially with the blockchain.
Buterin Thinks Small Holders Should Be Prioritized
Assuming the community gets back on track, one of the community proposals is to first reimburse all of the initial deposits of small UST holders to substantially improve general morale and sentiment, while other means will be figured out later to settle larger holders. The estimated payout cost is between $1 billion to $1.5 billion.
Ethereum founder Vitalik Buterin showed support for the idea via his official Twitter handle on the 14th of May. In the tweet, he noted that the main focus should be on the smaller holders who need the money.
Vitalik Buterin tweeted, “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.”
He added that in this kind of situation, potential covers like financial deposit insurance could be of great help.
“The obvious precedent is FDIC insurance (up to $250k per person). 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.”
The obvious precedent is FDIC insurance (up to $250k per person)
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. pic.twitter.com/25XkfE8UVc
— vitalik.eth (@VitalikButerin) May 14, 2022
It’s worth noting that the proposal that brought about Buterin’s comment is currently being considered. It’s targeted at sending users up to a per-wallet cap of $50,000.