- The Terra community has approved founder Do Kwon's plan to create a new blockchain for the luna token.
- The hard fork will move luna from a "classic" blockchain to a new Terra chain, but won't revive stablecoin terraUSD.
- Terra's algorithmic stablecoin lost its dollar peg, which spurred a sell-off across the crypto market.
Terra supporters have voted to approve founder Do Kwon's plan for a new blockchain for its luna cryptocurrency, without reviving the failed stablecoin terraUSD.
The plan called for a hard fork of the existing Terra blockchain. The new community-owned chain will now continue with the name "Terra", and its native token will take on the "luna" name. The older chain will be known as "Terra Classic" and its token renamed "luna classic".
The proposal ditches the terraUSD (UST) stablecoin, whose collapse helped spur a wider sell-off in crypto markets.
"Terra 2.0 is coming," the crypto project said on Twitter Wednesday. "With overwhelming support, the Terra ecosystem has voted to pass Proposal 1623, calling for the genesis of a new blockchain and the preservation of our community."
UST lost its one-to-one peg to the US dollar earlier in May, after confidence in the algorithmic stablecoin evaporated. The cryptocurrency and luna, run by Terraform Labs, both crashed to effectively zero.
The two tokens' freefall is estimated to have wiped out more than $50 billion in paper value. The crash helped spur a crypto market bloodbath over concerns that the UST death spiral could hit other coins.
Investors were already cautious about high-risk assets like crypto in the face of the Federal Reserve's plan for a series of interest-rate hikes to combat red-hot inflation.
Terra now plans an airdrop of new luna starting Friday, and indicated previously it would distribute as many as 1 billion of the tokens. Of that, 30% will go to a community pool of investors.
Terra said 35% will go to pre-crash holders of luna classic, and 10% to pre-crash owners of UST, with 10% and 15% going to post-crash owners of those coins, respectively. But wallets with more than 1 million of either coin before the depeg will have to wait more than a year, according to a Coindesk report.
"The Terra ecosystem and its community are worth preserving," Do Kwon said in the proposals. The new network is expected to be launched Friday.
Luna dropped 8.5% in the last 24 hours to $0.000167, according to CoinMarketCap data, as the broader crypto markets fell.
Read more: NFTs are holding up better than cryptocurrencies amid the market turmoil, according to this AI-driven blockchain firm. An expert explains why they behave differently — and reveals the best categories to own