Terra Recovery Plan Mired With Technical Issues, Here’s Why

Terra’s recovery plan to stabilize the blockchain and recover some value appears to be mired with technical hiccups.

Roughly two proposals associated with the recovery plan have failed to execute since last week, due to issues with the smart contracts behind them.

The proposals sought to burn excess UST, and also restore inter-blockchain communication between Terra and other chains, allowing holders to move back their LUNA and UST to Terra.

The errors come as Terra prepares to hard fork the blockchain and launch a new version. So far, 66% of LUNA holders appear to be in favor of the proposal.

Two Terra proposals fail to execute

The more serious of the two failures is Prop 1188, which aimed to burn about 1.4 billion UST tokens from Terra’s community pool, to support prices. But while users voted in favor of the proposal, it was not executed due to a smart contract error, which attempted to burn more UST from the pool than existed.

Terra put forward an updated proposal, number 1747, to redo the measure, which is currently being voted on.

The more recent of the two is Proposal 1299, which aimed to restore some degree of inter-blockchain communication (IBC) between Terra and other chains- in this case Osmosis.

The proposal did not execute as some degree of IBC channels had already been opened, causing an error in the smart contract- Terra said in a Tweet.

Developers are now working on restoring IBC channels more broadly.

Will the hard fork execute?

With a majority of LUNA holders in favor of the new Terra, it seems likely that the governance proposal will pass. But over 13% of holders have also vetoed the proposal, so it is unclear how their veto will be considered.

Still, on the technical end, the hard fork is described as the biggest proposal ever undertaken by the chain. The proposal intends to create a new Terra without Terraform Labs or the UST stablecoin. It will also airdrop new LUNA tokens, divided across pre-crash and post-crash holders.

Whether the developers, and Do Kwon, can achieve this with no disruptions, remains to be seen. Word from Kwon is that the blockchain is still collecting data for the airdrop.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn’t trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns.
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