A hard fork of the Terra blockchain with a rollback of the network to the time before the collapse of LUNA and UST will not work, because the new chain will not have any value. This was stated by the head of the Binance cryptocurrency exchange, Changpeng Zhao.
Personal opinion. NFA.
This won’t work.
— forking does not give the new fork any value. That’s wishful thinking.
— one cannot void all transactions following an old snapshot, both on-chain and off-chain (exchanges).Where is all the BTC that was supposed to be used as reserves? https://t.co/9pvLOTlCYf
— CZ ???? Binance (@cz_binance) May 14, 2022
After the collapse of the Terra ecosystem, the project community suggested a hard fork and issue a new token. The distribution of the latter can be carried out according to the network snapshot made before the market crash.
The initiative also provides for a new mechanism for organizing the blockchain and the creation of a pool for the redemption of the UST algorithmic stablecoin.
“The fork will not give the new chain any value. This is wishful thinking. It is impossible to cancel all transactions following the old snapshot both in the blockchain and outside it (exchange),” Zhao wrote.
The head of Binance wondered regarding the use bitcoin reserve Luna Foundation Guard (LFG). According to him, the assets should have been used to redeem UST, but they did not.
According to analytics firm Elliptic, LFG had regarding $3.5 billion in BTC. When the algorithmic stablecoin lost its peg to the US dollar, these funds were transferred to the Binance and Gemini platforms, which made it difficult to further trace transactions.
Following the collapse of Terra’s UST stablecoin, we trace the $3.5 billion in bitcoin held in reserve to help prevent exactly such an outcomehttps://t.co/rTvpB7PLQn
— elliptic (@elliptic) May 13, 2022
“Bitcoin reserves were quickly moved to two cryptocurrency exchanges, but it is not clear whether they were sold, moved to other wallets, or remained on the platforms,” the specialists wrote.
The Block analyst Larry Cermak tweeted that Zhao is paying a lot of attention to LUNA as Binance led the Terraform Labs seed round in 2019 and also invested $300 million in the company in 2021.
The head of Binance denied this information, following which Cermak deleted the tweet.
According to Zhao, Binance did not participate in Terraform Labs’ second round of funding. The head of the company explained that he was simply “pointing out potential problems” for the ecosystem.
3/ Binance did not participate in the 2nd round of Luna’s fund raising nor did we acquire any UST.
Binance Labs invested $3m USD in Terra (the layer 0 blockchain) in 2018. UST came much later following our initial investment.
— CZ ???? Binance (@cz_binance) May 15, 2022
“Coin issuance and forks do not create value. Buyback and incineration do this, but require funding. Funding that the project team may not have. […] I’m not always right, but my position is that failures happen. But when this happens, transparency, quick communication with the community and accountability to it is extremely important, ”he wrote.
Recall that Zhao said that “disappointed” with the actions of the Terra ecosystem team. In his opinion, the developers endangered investors, but did not take responsibility.
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