Ethereum founder Vitalic Buterineannounced that it supports the TerraUSD (UST) recovery plan, which prioritizes investors with less capital.
The proposal, shared on a Twitter account called PersCapital, suggested that after losing its funds to Anchor, Terra’s lending and borrowing protocol, bailout plans should begin with equity holders with smaller investments.
“One way, let’s say every deposit in every wallet TerraUSD (UST) will be to refund over $0.30.
This method, however, would have resulted in Terra disproportionately transferring funds to the wealthy whales who held most of the UST during the depeg. And you will only give 30% of the money to everyone. In this rescue plan, everyone would continue to suffer. So let’s explore the other way.
The second way would be to prioritize smaller wallets. Individuals with several thousand or more USTs invested in Anchor. If Terra had focused on the “poorest” part of 99.6% of wallets, then they could have made this huge group 100% whole.”
PersCapital believes the community will respond positively to the move, noting that the benefit of prioritizing smaller wallets means more people will be 100% reimbursed for their losses and will ultimately be fairer. According to the person who came up with the idea, it will be easier to solve the problem with the whales once you have solved the problem with the small investors.
Buterin noted that precedents already exist for such bailouts, including the Federal Deposit Insurance Corporation’s (FDIC) standards, which have an upper limit on the amount a business can claim.
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