- Terraform Labs has begun winding down its operations, with Proposal 4818 being the final chain upgrade that it will implement pursuant to its settlement with the SEC.
- Proposal 4818 will burn all LUNA tokens owned by TFL, remove the illegally minted assets following the IBC attack, and eliminate the blacklist function that the hack necessitated.
A little over two years after the collapse of LUNA, UST, and the entire Terra ecosystem, the company behind the ecosystem is finally shutting down.
Terraform Labs (TFL) announced on X that it’s winding down its operations, which is in line with its settlement with the US SEC. As we reported, the company settled with Gary Gensler’s agency for $4.47 billion, with $3.58 billion being paid in disgorgement for all the profits it generated illegally. The rest was a civil penalty for orchestrating one of the biggest collapses in the crypto industry, where over $60 billion was immediately lost, and hundreds of billions more followed suit in a series of collapses of giant crypto firms like Three Arrows Capital.
In its post, TFL revealed that Proposal 4818 would be its last chain update before it surrenders control of the network to the community. TFL was founded by fallen crypto king Do Kwon, who is behind bars for his role in Terra’s collapse.
As TFL begins winding down its operations, Proposal 4818 will be the final chain upgrade that we implement. Pursuant to TFL’s settlement with the SEC and implementation of its proposed chapter 11 plan, TFL will no longer have the ability to support future chain upgrades.
Going…
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) August 27, 2024
Proposal 4818 aims to upgrade Terra’s mainnet to version 2.12.4. Among the changes will include an update of the validator minimum commission rate to 5% and the burning of Terraform Labs’ LUNA, which is in line with the SEC settlement. However, the LUNA that it received from the community pool has been held in a locked vesting contract, and this upgrade will allow the company to finally burn it.
Additionally, the company holds another wallet with “significant LUNA holdings.” It claims that it has tried to donate these tokens to the community to fund development, but the wallet has allegedly been compromised, and the best course of action is to burn them.
The upgrade will also allow the ecosystem to remove the illegally mined assets from the IBC exploit finally.
Proposal 4818 further advocates for the removal of the blacklist functionality in the network. This functionality had been added to prevent the IBC exploiter from withdrawing the illegally minted assets. But now that they will all be burned, there’s no need to have a backdoor.
The proposal met the minimum 30% voting quorum and, at press time, had garnered 60.1% of the votes. The voting period ends this Thursday, August 29.
“Going forward, we look to community-driven initiatives such as the Phoenix Directive to take over maintenance and operational responsibilities for the Terra blockchain,” TFL concluded.
Phoenix has been one of the ecosystem’s leading contributors. The group’s most recent proposal targeted the IBC exploiter, asking for the ecosystem’s approval to unlock $3 million worth of LUNA from the community pool to buy back the stolen assets and re-establish the Axelar bridge between Cosmos and Terra.
The proposal has received the support of 74.84% of the community at press time. Voting ends on August 30.
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