Binance’s head said about the lack of value of the Terra hard fork

What’s new? Changpeng Zhao, the founder of cryptocurrency exchange Binance, has expressed doubt about the feasibility of Terra’s blockchain developers’ decision to conduct a hard fork and roll back the network to the moment before the collapse of LUNA and UST rates, as well as the break of UST’s peg to the US dollar.

Personal opinion. NFA. This won't work.- forking does not give the new fork any value. That's wishful thinking.- one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).Where is all the BTC that was supposed to be used as reserves? https://t.co/9pvLOTlCYf— CZ 🔶 Binance (@cz_binance) May 14, 2022

What did Zhao say? The Binance chief said that the new chain would not have any value after the hard fork. In his view, all transactions after an old snapshot cannot be voided, either on or off the blockchain (on exchanges). In his tweet, Zhao also wonders where all the Luna Foundation Guard (LFG) bitcoins that were supposed to be used as reserves have gone.

A snapshot is a record of the state of a blockchain at a certain block height and at a certain point in time. The snapshot includes all data about wallets, transactions, and balances.

The LFG started buying bitcoins to support the UST stablecoin in March 2022. The next purchase took place on May 5 and amounted to $1,5 billion. Terraform Labs CEO Do Kwon noted that bitcoin is the best collateral, with a total of $10 billion worth of BTC purchases planned by the LFG.

What events happened before? On May 8, the algorithmic stablecoin UST lost its peg to the US dollar and continued to fall over the following week, hitting $0,03. The rate of the LUNA token securing it also collapsed to almost zero at $0,00002. As of 10:20 Moscow time on May 16, LUNA is trading at $0,000227 and UST at $0,13 (Binance data).

On May 13, Do Kwon proposed a plan to restore the Terra ecosystem. Kwon’s idea is to compensate UST and LUNA holders who were unable or unwilling to sell their assets during the price drop. In addition, the Terra community decided to roll back the network prior to the beginning of the collapse of the UST stablecoin rate. The community also proposed removing Terraform Labs, returning the UST collateral, and developing a new mechanism for the LUNA token.