May 2022 was a month that can never be forgotten in the history of the crypto industry. A month that recorded the largest ever crypto collapse.

TerraUSD (UST), the algorithmic stablecoin of Terra blockchain, lost its peg. At the same time, Terra (LUNA), which is now renamed Terra Classic (LUNC), dropped from around $100 to fractions of a Cent within a few days.

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$12 Million Reimbursement for LUNA Victims

According to InsurAce in a blog post, $12 million will be spent to compensate 155 investors that were grossly affected by the Terra collapse.

InsurAce was specifically launched in April 2021 to provide risk protection services to the decentralized finance (DeFi) industry. It’s meant to insure users’ investments against sudden collapse or bankruptcy such as that of Terra ecosystem.

Due to the increasing insurance claims, InsurAce has to spend about $11.7 million to compensate investors. It’s worth noting that the firm only received relatively $94,000 in insurance premiums from UST investors.

The DeFi insurance firm has a token codenamed INSUR and specially created for investors and stakers to vote on various issues. It was a voting process that found 155 claims eligible, while 18 claims were found ineligible.

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Reacting to the development, Dan Thomson, the CMO of InsurAce, said:

“The decentralized voting was conducted by InsurAce’s community of Claims Assessors who hold and stake INSUR Tokens. And at the conclusion of the Voting process, they approved a total of 155 UST de-peg Cover claims and 18 rejected as not ineligible in line with the Stablecoin de-peg Cover terms and conditions.”

Also, the CMO disclosed that the firm has a plan to compensate investors and stakers since the money used for compensations belongs to them.

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According to the report, InsurAce has processed relatively 173 claims and it’s currently considering 61 other outstanding claims.

Read Also: Terra Team Explains Why Terra 2.0 Is Not a Fork but Entirely New Chain

Back on May 13th, InsurAce caused a stir by stating that it would shorten the claim period from 15 days to 7 days and limit some insurance claims for those who were left devastated with huge losses after the collapse of Terra blockchain.

InsurAce reportedly took measures to reduce the amount it had to pay to its affected customers. After the controversy, Dan Thomson, the chief marketing officer at InsurAce, said most of the 173 claims submitted, including the rejected ones, had already been processed, and the DeFi insurance company was ready to disburse about $11 million to claimants.

Dan Thomson said, “To prevent further losses for UST, a move was needed to shorten the billing period for 234 claims in the Terra portfolio. There is no point in delaying the process on behalf of Kerr.”

Terra Blockchain Rebirth Proposal Approved

Via a governance vote that lasted for about a week, Do Kwon’s proposal to rebirth the Terra blockchain, which will result in the creation of LUNA 2.0 tokens, was approved

The approval will bring about the creation of a new blockchain that will proportionally airdrop tokens to those affected by the sudden crash of the TerraUSD (UST) algorithmic stablecoin.

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The new blockchain is codenamed Terra 2.0, while the current chain will be renamed Terra Classic.

According to the details provided in the proposal, Terra 2.0 is scheduled for mainnet launch on Friday, which will make the new token (LUNA 2.0) available for trading.

These tokens will be airdropped to existing stakeholders of the network at a pre-decided percentage. Many of the tokens will be subject to vesting periods to avoid immediate selloffs.

It’s worth noting that the new Terra blockchain will exist without the depegged algorithmic stablecoin TerraUSD (UST).

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