THORmaximalist, a Terra validator, released the full chat logs of the events leading up to the launch of LUNA 2.0.
The group was named “Terra Rebirth League” and contained members of Terraform Labs, including Do Kwon and most major validators. The conversation began on May 12, 2022, via Telegram and showcased a chaotic mess of confusion and uncertainty.
The push to release Luna 2.0 was seen as a matter of urgency within the “war room.” As Terra validator, THORmaximalist exclusively told CryptoSlate:
“I think it was urgent and every day that passed by value was drifting away. Protocols were thinking about moving to other chains or starting their own L1s.
The projects on the chain are multiplicators of community value. Every single day that would have passed the multiplicator would have went down.”
The internal group defined itself as “a specialized ongoing task force, independently operated, always critically assessing all attack vectors/vulnerabilities” by BigB from the validator, Smart Stake. One member proposed “to put the five validators with the highest voting power in charge here (at least of coordination).”
At one point, Do Kwon commented, “well, for one thing, the whale with beth staked in anchor and shorting UST will be locked there for two days, so if the market nukes, then he’s fucked.”
Aside from this, the three main issues identified on May 12 were:
“1) Market module is still running – Yun is working for the patch
2) Bridged asset is locked – not sure we gonna care about this
3) Distribution plan for the new chain”
One thing is clear from the conversation, there was no clear leadership, and the debate was often fragmented. Members debated which protocols needed to be taken into account, with no single source of truth for the dApp that would have exposure to a decision to fork or relaunch a new chain.
A stablecoin for LUNA 2.0
According to the logs, introducing a new stablecoin to LUNA 2.0 was a part of the long-term plan discussed by the “war room.” There was even a suggestion to rebuild from scratch using “longwave radio” to create a blockchain that “does not need the internet to function.” It is unclear from the thread whether this was a joke.
A crypto-backed algorithmic stablecoin was suggested to be included in the new LUNA chain. The stablecoin was indicated in a paper written by members of IOHK, the company behind Cardano. It proposed:
“an algorithmic stablecoin protocol that behaves like an autonomous bank that buys and sells stablecoins for a price in a range that is pegged to a target price. It is crypto-backed in the sense that the bank keeps a volatile cryptocurrency in its reserve. The reserve is used to buy stablecoins from users that want to sell them. And revenue from sales of stablecoins to users are stored in the reserve.”
Confusion on when to restart
When the first call to restart the blockchain came, many validators did not know what block height they should be at or, in fact, at what time they should resume their node risking “db corruption,” according to the chat.
A member of TerraformLabs even asked, “Could someone enlighten me on what this new release is for or what it does?” The global distribution of validators also caused a problem as many were “sleeping after the last days of chaos.” Rohit from Coinbase Cloud commented:
“Never seen more confusion on something this serious.”
Even Do Kwon himself stated in the group:
“Can someone summarize the issue? I’m pretty confused.”
Furthermore, the group had no idea whether it had enough voting power to make changes, even if it could reach a consensus on a direction. Eventually, the group created a Notion table to ascertain the status of each validator before restarting the chain.
Do Kwon had the final say.
The validators decided to hold off on restarting the chain even with 63% approval until they received “TFL’s blessing to restart the chain.”
When validators finally received word from Do Kwon, he delegated and asked other team members to “guide on network launch sequence… I haven’t done it in a while, and I forget.”
At this point, BigB from SmartStake wrote:
“I understand validators represent community interests but these decisions have hugh ramifications. If tfl/others want to play safe for legal reasons and these decisions ought to be taken by others, I am afraid everyone should be taking legal opinions before chiming in. It can’t be that TFL led from the beginning and now it’s upto validators or community (which isnt represented here).”
However, TerraformLabs had to lead the process as validators were reticent to restart the chain without its “blessing.” Further, members at one point stated the next steps were to “Ask Do [Kwon] for greenlight + official announcement.”
After many hours of debate, the group took a short break at 4 am while waiting for word from Wormhole.
Wormhole’s support was needed as the primary rationale for restarting the chain was to allow users to bridge their assets back to their native chain.
Luna Classic to close after a month?
The group intended to restart the chain only for one month based on the chat logs. Whether this is still the goal is currently unknown. The group eventually decided to restart the chain without taking it to community governance (due to the chain being offline), and at this point, Jiyun from DSRV declared:
“Let’s make successable fail. for the community.”
It seems that by this point, some of the group had all but given up on the concept of on-chain governance for LUNA, with Peter from Chainlayer saying:
“you do realize that in the last hours of the chain people were able to buy billions of terra for scratch? and that onchain governance (assuming they got some out of it and its not all in exchanges) is pretty much in the hands of the person that scooped up the most Luna?”
Around 6 am, the final decision to launch the chain appears to have come from Do Kwon,
“Do said let’s go? So let’s go!”
Since the launch, there have been countless issues, including pricing oracle mismatches and incorrect amounts of tokens being airdropped. Regarding issues related to the risk/reward of LUNA 2.0 launch being deployed rapidly and the subsequent oracle issues with Mirror Protocol, THORmaximalist told CryptoSlate:
“There was issues and the [Mirror Protocol] team should have caught them very very early. Right now luna sits at close to 10B fdv. In a week from now it would have been 1-2. I think the risk reward was good.”
The conversation was frantic and confused throughout. However, what is most frustrating when reading the logs is that there were many knowledgeable people in the room, but Telegram as a medium for conversation was not optimal.
Much of the discussion in crypto happens on Telegram, but it’s hard to accept that this was the most efficient way to decide on the relaunch of a chain worth over $16 billion just a few hours previous.
The full transcript of the internal conversations between Do Kwon and the validators can be found on the blockchain, preserved forever.