These changes highlight Terraform Labs’ measures to address Terra’s issues and rebuild trust and stability within the ecosystem.
Terraform Labs, the blockchain firm behind the Terra (LUNA) ecosystem, has announced two significant updates to enhance its ecosystem’s stability and utility. The company is set to reopen the Shuttle Bridge and initiate the burning of 150 million LUNA tokens.
In a recent announcement on X, the blockchain company revealed it will reactivate the Shuttle Bridge following the court’s orders, enabling users to reclaim locked assets on Terra Classic.
Shuttle Bridge Reactivation
The Shuttle Bridge is a crucial system for moving assets between Terra and other blockchains. The bridge was previously shut down to undergo significant upgrades to improve its security and efficiency. Terraform Labs intends to transfer all assets from the Shuttle Bridge wallet to a new wallet and launch an easier-to-use interface to streamline the redemption process.
The company noted that users will have 30 days to reclaim their wrapped assets from the Bridge wallet. Following this timeframe, Terraform Labs plans to permanently shut down the Shuttle Bridge, with any remaining assets in the wallet set to be burned.
Burning of LUNA Tokens
To lower the amount of LUNA in circulation, the court has permitted Terraform Labs to halt the distribution and burn 150 million LUNA tokens acquired from Terra community funds. This token burn is a key component of a larger plan to stabilize LUNA’s value and rebuild trust among the community and investors.
Furthermore, Terraform Labs will initiate the burning of the 125 million LUNA tokens currently staked by 49 validators endorsed by Terra. After the burning, these 125 million LUNA tokens and 2.5 million LUNA allocated for liquidity will be burned.
Court Approval and Settlement Agreement
Terraform Labs’ proposed Chapter 11 plan, incorporating these actions, is still awaiting full court approval and is not expected to be implemented until late September 2024. The plan is a crucial part of the firm’s extensive strategy to emerge from bankruptcy and reestablish Terra as a dependable and stable entity in the crypto market.
The steps taken by the blockchain firm are also in line with a settlement agreement between Terraform Labs and the United States Securities and Exchange Commission (SEC). The agreement seeks to resolve regulatory issues and ensure adherence to federal securities regulations, further supporting the restructuring and stabilization initiatives.
The SEC had accused the company and its CEO, Do Kwon, of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain a value of $1.