Terra developers propose revised 95M LUNA ecosystem funding program

Published at: Oct. 17, 2022

On Monday, developers of the Terra ecosystem, which consists of Luna Classic (LUNC), TerraUSD (USTC), and Luna 2.0 (LUNA), proposed a revised expansion program for allocating 95 million LUNA ($248 million). As told by Terra, the new proposal is designed to incentivize development in the Terra ecosystem and fix issues in the original proposal.

In the original plan, around 10% of LUNA's total supply, or 100 million LUNA, would be allocated to the ecosystem, with 80% of this amount going to developer mining rewards. However, Terra staff explains that there are only a handful of projects with total value locked on the protocol, and such lack of competition would not result in the proper distribution of mining revenue.

Under the new proposal, developer mining rewards would decrease from approximately 80 million LUNA to 20 million LUNA. On the other hand, 50 million LUNA would be reallocated as liquidity mining rewards to incentivize building decentralized exchanges on the Terra ecosystem. Another 20 million LUNA would be given as developer grants, with a maximum recipient amount of 125,000 LUNA per project per year. Finally, 5 million LUNA will be given to users to incentivize traction.

1/ Attention #LUNAtics, a new proposal has just been posted on Agora outlining a new ecosystem expansion program - The Terra Expedition https://t.co/wW92766GXj

— Terra Powered by LUNA (@terra_money) October 17, 2022

A seven-member committee consisting of TerraForm Labs (TFL) employees, community leaders, and external experts will oversee the allocation of funds. The appointment period will be one year, with non-TFL employees in the group receiving a monthly compensation of 1,000 LUNA. Although the committee members will vote to decide on funding proposals, the committee itself will have discretionary authority over the allocation of funds.

Meanwhile, the treasury will be managed by a separate group consisting of two validators, two community members, and three members of TFL. A few months earlier, the Terra Luna ecosystem suffered a devastating $40 billion collapse, with the algorithmic LUNC-USTC coin pair spiraling out of control as part of a week of intense sell-offs. Since then, the ecosystem has partially stabilized but remains well below of pre-crash market valuation. According to DeFi Llama, TVL on Luna currently stands at $51 million. 

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