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News

Changpeng Zhao believes that forking Terra is not the solution to LUNA and UST’s problems

May 14, 2022 - Around 3 mins mins to read
Changpeng Zhao, the founder and CEO of Binance, has expressed reservations regarding a proposal to fork the Terra Blockchain in order to address the issues of UST’s enormous de-pegging and LUNA’s consequent inflation.
Changpeng Zhao believes that forking Terra is not the solution to LUNA and UST's problems
Binance CEO does not assume forking Terra is the answer to LUNA and UST’s Woes

According to Changpeng Zhao, such a transfer will not add value to the new fork and is merely ‘wishful thinking.’ CZ also discovered that it is not possible to simply nullify all transactions on a blockchain after an outdated snapshot, particularly for buying and selling transactions on cryptocurrency exchanges. On May 14, the CEO of Binance gave his personal opinion on Terra’s “revival” plan as follows:

The richest billionaire in the crypto industry also stated that he himself does not hold UST and did not understand the situation at first, but is now caught up in this scandal.

Changpeng Zhao, earlier on the evening of May 13, declared “break the rule” to be neutral, criticizing the Terra team for how to handle the crisis, not listening to Binance’s proposal, but causing the total supply of LUNA to increase nearly seemingly endless, causing the coin’s price to drop to near zero.

Changpeng Zhao shared his insights into the situation through Twitter and was part of a response to another tweet that suggested that the final solution for the Terra blockchain was as follows:

  • Carrying out a hardfork of the Terra blockchain to Terra2
  • Undertaking a snapshot of all holdings before the collapse of UST
  • Issuing affected holders with new LUNA2 digital assets
  • Proceed to create a new, better chain with LUNA2 and UST2 digital assets
  • Create a pool to repay the old UST peg

CZ questioned where the Luna Foundation Guard’s Bitcoin went during the de-pegging of UST, in addition to stating that hard forking the Luna blockchain was not a wise idea. According to CZ, Bitcoin should have been used first to purchase UST. Concerning the status of the LFG’s Bitcoin, Do Kwon previously stated that Terra’s team was now working on recording the use of the BTC during the de-pegging event.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.