The Ethereum co-founder Vitalik Buterin and Binance CEO Changpeng Zhao (CZ) tweeted their support for a proposal posted on Terra’s Governance forum. It proposes paying off all UST holders in a tiered repayment structure prioritizing paying off the smallholders.
After TerraUSD (UST) de-pegged from $1 and its native token LUNA plummeted by more than 90% last week, proposals to resurrect the platform and compensate UST and LUNA holders flooded in.
Along the same lines, the Twitter account “PersianCapital” cited an anonymous Terra forum member’s proposal. Buterin and CZ supported the proposal, which proposed making Terra investors “whole” again with its remaining funds.
It stated that all initial deposits (not yield) of small UST holders should be returned to “greatly improve general morale and sentiment” while determining how to sort creditors and larger investors (whales) later since over 80% of Anchor users will be made whole. The reimbursement cost is expected to cost between $1 billion and $1.5 billion.
Buterin cited FDIC standards, which have a cap on the amount an entity can claim, and interestingly uses Singapore’s Employment Act to prove his remark of paying out “low-earning employees” first and a more “figure-it-out-yourself approach” for the wealthier.
Furthermore, because small wallets constitute the vast majority of the community in terms of numbers, PersianCapital proposed, “If Terra just focused on the “poorest” 99.6% of wallets, then they could make this gigantic group 100% whole.”
To this, CZ reacted by saying, “Binance will let this go and ask the Terra project team to compensate the retails users first, Binance last, if ever.”