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Lido Finance decided not to support the new Terra blockchain after its launch after the sudden collapse of the current Terra chain earlier this month.
The Decentralized Autonomous Organization (DAO) of the Decentralized Finance Project (DeFi) voted strongly against providing support for the new network as of 6:20 a.m. ET on Wednesday, with 95% of the vote rejecting the idea. A total of 54 million LDO, Lido’s management token, voted against, and only 3.1 million LDO voted in favor.
Lido Finance is a liquid steaking protocol that reveals the value of the delivered tokens, providing stakeholders with greater liquidity. It is currently the dominant liquid steaking protocol on Ethereum. According to the proposal, Terra was its second largest platform after Ethereum and before its collapse it was counting on $10 billion.
Terra was a blockchain project aimed at creating an algorithmic stablecoin known as TerraUSD (UST). This was supported by a second token, Luna, and the relationship between the two was designed to maintain a stablecoin peg to the U.S. dollar. However, when there was a lot of pressure from sellers, the bond between them failed to keep the UST on its peg. This led to a deadly spiral for Luna in early May as the supply of tokens increased exponentially and the price dropped to zero.
After this crash, voting to decide the future of the Terra blockchain should be completed in less than an hour. The main proposal is to restart the chain by distributing tokens to different users affected by the collapse of the previous network. Many tokens are subject to a period of entitlement.
It is important to note that during the distribution, tokens are distributed to projects that intend to develop a new chain. This includes emergency funding for major projects. If Lido Finance had decided to support the new Terra network, it is likely that it would have been eligible for these funds. The proposal assumed that Lido Finance would receive a monthly income of $19,250 as a result of supporting the new network.
However, these incentives were not enough to convince token holders that Lido Finance should support the new network. Comments on the proposal say it could be risky to support the new network when it is built, as it’s unclear if it will gain traction in the same way as the previous blockchain.
“We can always join the reboot later if the chain proves to be useful, well-managed and gets the support of the masses. There are currently too many reboot issues, and there are potentially big drawbacks and small benefits.”
#Lido #Finance #support #Terra #blockchain
