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The entire crypto industry was stunned by the collapse of the Terra ecosystem, which has led to an unprecedented loss in investors’ assets worth billions of dollars. The ecosystem is yet to recover from the massive loss.

Ethereum’s co-creator, Vitalik Buterin, has called for the team at Terra to show more concern for the smallholders of the UST tokens. The latter was initially lured into investing in the network with promises of high yields by cryptocurrency influencers.

According to Buterin, the crisis-ravaged Terra (LUNA) network should prioritize small token hodlers in the project as part of any impending reimbursement plan.

Terra Eco-system Crash

The Terra ecosystem was widely reported to have been dealt a huge blow on May 9 when the LUNA token tanked 100% alongside the USD pegged stablecoin (UST), which lost a substantial part of its USD value, resulting in large-scale losses by investors and traders alike.

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The dust is yet to settle as both LUNA and UST investors are still reeling from the huge losses they have incurred. However, the Terra community has started restrategizing on how to bounce back, reestablish the crumbled ecosystem, and how best to provide relief to the people affected by the massive financial loss.

One proposal from the community is that if the UST’s dollar peg is stabilized, how will the network reimburse the initial deposits without the yields to the small scale investors to improve their morale and trust in the network’s ability to recover fully from the setback?

Meanwhile, while the smallholders will be given priority, large investors and creditors are expected to be sorted later when every little detail involving smallholders has been settled. The estimated payout is between $1 billion to $1.5 billion.

The Ethereum co-founder has thrown his weight behind the idea in his latest Twitter post on May 15, adding that it is the small investors who are in financial distress the most at this moment, suggesting that large-scale hodlers can cope at the moment pending when the network will be able to sort them out.

Suggested Covers for Future Occurrences

The Ethereum founder also highlighted the need to have a financial cover to mitigate the effect of future scenarios on the network, considering the current circumstances. As such, financial deposit insurance plan is a good thing to start with.

Buterin cited the Singaporean model with strong regulation to help low-earning company employees in scenarios like this, while the financially well-to-do can figure it out themselves. He affirmed that plans like this are good for safeguarding small token hodlers in the crypto industry.

Meanwhile, it is still unclear if the Terra project will be rebuilt, considering the massive setback it has suffered in the past couple of days, or if it will attempt a brief resurgence to recoup the losses suffered by investors.

The Terra team will have to pull off a miracle to bring the network back to its feet more than anything else.

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Alicia Maher

By Alicia Maher

Alicia Maher is an accomplished news writer with a passion for storytelling. With years of experience in the field, she is skilled at delivering accurate, engaging, and insightful news coverage to her audience.