To fork or not to fork? That is the question. The recent debacle involving one of the biggest blockchains, TerraLuna, has thrown the crypto market into disarray and has everyone questioning cryptos and their founders. One CEO, in particular, is under immense scrutiny: Do Kwon, founder of Terraform Labs which is behind UST and LUNA. UST was unpegged to the dollar and crashed which had a domino effect on LUNA which crashed 100% of its value from over $100 at its high to less than a cent now. As the LUNA community argues about the various proposals to revive the fallen blockchain, here is an analysis of the most talked about proposal by Kwon: forking the blockchain.
What is a fork and why could it solve Terra’s woes? A fork in software is an upgrade and is essential to the long term success of blockchains as they need to get updated as time goes on and newer technology emerges. Forking can involve two conclusions, a soft fork or a hard fork. The difference lies within the extent of the update. A soft fork is an update that doesn’t require a new blockchain, the older version, and the newer version can communicate, and thus the blockchain stays as one updated blockchain. With hard forks, the blockchain is completely updated and there are two blockchains, one old and one new. The blockchains don’t communicate and have different names. Commonly the older one is called classic and the newer one retains the old name. In the case of bitcoin, it had a hard fork several years ago rendering bitcoin classic and bitcoin.
If a LUNA hard fork was to happen, as suggested by Kwon, there would be LUNA classic and LUNA the newly updated blockchain that would have a new mint price and allocation saving the blockchain from being gone forever and hopefully this time without the fatal flaws in the last blockchain. Here’s the current proposal,
The project would see 1 billion tokens distributed across the protocol as follows:
25% – Community pool
1% – Essential Developers emergency allocation
4% – Essential developers
35% – All bonded / unbonded Luna, minus TFL
10% – Luna holders (staking derivatives included) at the “Launch” snapshot
25% – UST holders at the “Launch” snapshot
This proposal came after much criticism from watchdogs in the industry who worried that Terra wasn’t community owned enough and that the operators had too much control. Despite this there was still much initial distrust of the fork idea, 92% in an unofficial open poll(roughly 7,000 votes) were against the idea but this poll wasn’t restricted to LUNA and UST holders only. In a later poll of the holders, 89% were in favor of the fork. But still many commented on their wish for a burn instead of a fork alleging that the fork is just another whale play that will end up hurting the community. A burn would just remove tokens increasing the price. Others including Billy Markus, founder of Dogecoin, said that the efforts are futile and that trying to save a failed blockchain is a stupid undertaking that will cause more harm.
If the proposal passes the fork is set to happen on May 27th which gives the community little time to sort out their differences and decide whether they wish to attempt to bring the blockchain back to life or leave it in the ashes of crypto history.