Changpeng “CZ” Zhao, the CEO of crypto exchange Binance, recently questioned the idea of hard forking the Terra blockchain as a means to revive the once-thriving Terra (LUNA) and TerraUSD (UST) ecosystems. Following up on the same, CZ revealed his perspective on the appropriate course of action for falling projects across the crypto community.
“This won’t work,” said CZ while dismissing the validators’ idea of a hard forking to TERRA2, which would involve providing a new version of LUNA to all holders based on a snapshot of the holdings before the market collapsed. CZ suggested:
“Reducing supply should be done via burn, not fork at an old date, and abandon everyone who tried to rescue the coin. I don’t own any LUNA or UST either. Just commenting.”
1/8 These past weeks have proven to be a watershed moment for the crypto industry. We have witnessed the rapid decline of a major project, which sent ripples across the industry, but also a new found resiliency in the market that did not exist during the last market downswing.— CZ Binance (@cz_binance) May 15, 2022
Pointing out the potential issues with forking Terra, CZ said that “Minting, forking, don’t create value.” However, he recommended buying back and burning as an ideal way to revive the token’s market value. While showing support for the Terra community, CZ highlighted the need for “more transparency from them. Much more!,” which includes details about specific on-chain transactions (transaction IDs) of all the funds:
“Failures can/will happen. But when they do, transparency, speedy communication and owning responsibility to the community is extremely important.”
CZ further clarified that Binance had no active investments in Terra, nor did the company acquire any UST holdings, dismissing the ongoing rumors on Crypto Twitter about Binance’s interest in Terra:
“Binance Labs invested $3m USD in Terra (the layer 0 blockchain) in 2018. UST came much later after our initial investment.”
Binance Labs, the investment arm of Binance, invested in numerous projects over the past four years, which according to CZ, have seen varying degrees of success and failures.
Moreover, CZ hopes Terra can rebuild itself “in a proper and sensible way.” Regardless, the decision Terra chooses to employ, the CEO plans to "support the community in any way we can."
8/ I am just hoping that the project teams can rise from the ashes and rebuild in a proper and sensible way. Regardless of my personal views, or the solution chosen in the end, we will always be here to support the community in any way we can.— CZ Binance (@cz_binance) May 15, 2022
Walking the walk on being transparent with users, CZ later clarified that Binance received 15 million LUNA tokens as part of the returns from the original $3 million investment on Terra, which still sits at an address "never moved or sold." He also disclosed that the same address contains 12 million UST tokens that were earned over time through staking.
4/ Now the important part.— CZ Binance (@cz_binance) May 16, 2022
To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retails users first, Binance last, if ever.
Binance (after a 5 min discussion) fully support this proposal. https://t.co/QnMx8aZ09A
On an end note, CZ chose to lead by example and offered to bear the losses while requesting Terra to "compensate the retails users first, Binance last, if ever."
Binance was among the early birds to have suspended UST and LUNA trading on its platform as the Terra ecosystem commenced its death spiral.
As a result, Binance users were no able to spot trade LUNA/BUSD and UST/BUSD pairs, just a day after Terra blockchain validators were forced to take the network offline on Thursday.