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Following the relaunch of Terra, LUNA tokens were lined up for various recipients, with a solid 10% set aside for developers on Terra 2.0. With the condition of returning the funds if the product launch does not happen within a year, a previously passed proposal (that saw the creation of the new chain) instructed that 8% of the dedicated supply be left to the Developer Mining Program. Another 1.5% to the Developer Alignment Program and the final allocation of 0.5% was set aside for emergency allocation.
Community votes on Prop 446 – Emergency Fund distribution plan
A proposal to determine how the Emergency Fund (0.5% of the total supply) would be distributed across possible recipients was recently approved. The proposal, submitted on behalf of several entities in the Terra community, would direct the funding to three groups; product-market fit (PMF) projects from Terra Classic, PMF projects without measurable TVL, and pre-PMF projects.
The proposal would prioritize the small-scale projects as it is an ‘Emergency Fund,’ as ranked by the minimum possible amount a single project should receive and the number of projects to receive a said amount. With an eligibility criterion enforced by long-term standing members of the Terra community who’ve promised to recuse themselves in case of conflict of interest, pre-PMF teams will receive between 25k and 75k LUNA.
Suggesting projects including Terran One, Random Earth, Coinhall, Terrascope, and Setten to be part of the second cohort (PMF but no TVL), the proposal would gift this bunch between 75k to 200k LUNA. This means that a combined 2.5 million LUNA is distributed across these the first two groups, leaving a further 2.5 million tokens for projects that were product-market fit and accrued quantifiable TVL.
This last group would see projects gain up to 25% (cap) of the remaining tokens, distributed based on the pre-depeg TVL of Terra. This would see decentralized exchange protocol Astroport receive the maximum 25%, staking platform Stader – 21.1%, and automated market maker TerraSwap – 12.2%, the three most significant allocations.
Terra’s fiasco spurs new crypto regulations in South Korea
Local reports from South Korea indicate that the ruling party in the country, People Power Party (PPP), is considering establishing new crypto regulations to prevent a Terra-style collapse from wiping away investments. While not much information has been revealed about these planned laws, chief policymaker Sung Il-jong confirmed that “a law on blockchain-based platforms” was in the running.
He added that while the special financial transaction law enforces anti-money laundering and addresses terror financing, it’s not wholly encompassing.
Head of the Financial Supervisory Service (FSS) Lee Bok-Hyun insisted on the need to establish a voluntary regulatory body. Lee sees this as the most viable way to regulate, as it would allow participation of experts across the board, an acknowledgment of the intricate and erratic nature of this space.
In addition to potential government action, Daily Sports, a local outlet, has reported that five of the leading crypto exchanges in South Korea – Upbit, Coinone, Korbit, Gopax, and Bithumb – have come together to create a council focused on investor protection.
The council would establish a strict code for listing and delisting tokens, eliminating any disparities in how exchanges do it. This will enhance regulatory compliance. However, since Korean exchanges rely massively on listing altcoins (unlisted by other exchanges) to bag their profits, most will likely be affected by the new strict code.
The emergency system would come into action within 24 hours in case of a Terra-like collapse, halting token trading, or delisting the affected tokens. The warning system is expected to debut in September, and a regular evaluation system for token listing will be established the following month.
Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.