Summary:
- Terra proposal 1623 to birth a new chain was not the only proposal undergoing a community vote.
- The Terra community was also voting on Proposal 1747, suggesting the burn of 1.38 billion UST from the community pool.
- Terra Proposal 1747 will reduce the outstanding bad debt of the Terra economy and help restore the UST Peg.
As the crypto community focuses its attention on the birth of Terra 2.0 due to a successful community vote on proposal 1623, another Terra proposal passed the voting stage unnoticed.
Earlier today, Terra Proposal 1747 sailed through without as much fanfare as its counterpart to introduce the new Terra 2.0 chain. Terra proposal 1747 received a total of 154.579 million votes, with 99.39% of participants voting for the proposal.
What Exactly is Terra Proposal 1747
To begin with, the existence of Terra Proposal 1747 was brought to the attention of the crypto Twitter community by @FatManTerra through the following tweet.
Just in: Terra's governance proposal to burn 1.38B UST from the Community Pool has officially reached quorum and will pass in 18 hours. This burn will reduce the total UST debt overhang by 11%. https://t.co/vWRFLkumXd
— FatMan (@FatManTerra) May 26, 2022
Terra Proposal 1747 main objective is ‘to reduce the outstanding bad debt of the Terra economy and help restore the UST peg by burning the remainder of the Community Pool’s UST.’
The proposal suggests that 1,017,233,195 UST from the Community Pool will be sent to the community burn address to be immediately destroyed. After the voting is complete, another 371 million cross-chain UST will then be bridged back to Terra and burned by TerraForm Labs.
The proposal goes on to explain the motivation for the burn as follows:
Eliminating a significant chunk of the excess UST supply at once will alleviate much of the peg pressure on UST. This is advantageous relative to the slow burn rate and type of downstream effects that inflated on-chain swap spreads induce on the Terra economy over an extended period.
Binance, FTX, and Other Major Exchanges Will Support Terra 2.0
As earlier mentioned, the voting and passing of Terra Proposal 1747 to burn 1.388 billion UST was overshadowed by the passing of Terra proposal 1623, which greenlights the creation of a new chain to co-exist with the old one that has the entire history of UST’s depegging and LUNA’s massive inflation.
At the time of writing, several major exchanges have announced their support for Terra 2.0.
They include Binance, Huobi, Bitrue, Bybit, Crypto.com, FTX, Gate.io, Huobi, and KuCoin. All the participating exchanges have expressed commitment to the Terra Airdrop plans for the new tokens and possibly supporting the trading of both Terra Classic (LUNC) and the new Terra (LUNA).