New Proposal Aims to Revitalize the Terra Ecosystem
On October 17, developers associated with the Terra ecosystem, which includes Luna Classic (LUNC), TerraUSD Classic (USTC), and Luna 2.0 (LUNA), introduced a revised expansion program that allocates 95 million LUNA (approximately $248 million). This proposal aims to incentivize development within the Terra ecosystem while addressing shortcomings identified in the original funding strategy.
Revised Allocation Strategy
Initially, the plan earmarked roughly 10% of LUNA’s total supply—100 million LUNA—for ecosystem support, with a whopping 80% intended for developer mining rewards. However, Terra staff noted that a limited number of projects were participating in the protocol, which hindered the effectiveness of mining revenue distribution. The logical conclusion: less is more.
Under the newly proposed framework, developer mining rewards would be slashed from approximately 80 million LUNA to just 20 million LUNA. In contrast, 50 million LUNA will be reassigned as liquidity mining rewards to spur the development of decentralized exchanges within the Terra ecosystem. Additionally, 20 million LUNA is allocated for developer grants, capping individual project recipients at 125,000 LUNA per year. Lastly, 5 million LUNA will be made available to users to boost platform engagement.
Oversight and Governance Structure
A seven-member committee, composed of employees from TerraForm Labs (TFL), community leaders, and external experts, will oversee the allocation of these funds for a period of one year. Interestingly, non-TFL members of this committee will receive a monthly compensation of 1,000 LUNA, providing a financial incentive for community involvement. While the committee will vote on funding proposals, it retains discretionary authority over fund allocation decisions. In a novel twist, a separate group comprising two validators, two community members, and three TFL representatives will manage the treasury.
Recovering from the Collapse
This renewed focus on development comes in the wake of the Terra ecosystem’s harrowing $40 billion collapse earlier this year, which was sparked by the dramatic collapse of the algorithmic LUNC-USTC coin pair. Following a week of intense sell-offs, the ecosystem has made strides towards stabilization but is still struggling to regain its pre-crash market position. According to data from DefiLlama, the Total Value Locked (TVL) in Luna currently stands at a mere $51 million—a far cry from its previous glory.
Looking Forward
As excitement stirs around the new Terra Expedition proposal, the community watches with bated breath to see how these adjustments will impact the ecosystem’s future. Balancing incentives among developers, projects, and users will be crucial as Terra aims to repair and rebuild its fractured network.
