Is Do Kwon’s Terra Recovery Plan Part Of A “Kill Switch” Protocol?

A key part of Terra’s recovery plan is the removal of Do Kwon’s Terraform Labs and making the blockchain completely community-owned.

But this aspect of the plan may have been premediated. An old interview of Kwon, which resurfaced recently, shows the Terra founder talking about a “kill switch” for Terraform Labs (TFL).

The Terra recovery proposal will include a hard fork to a new chain, called Terra Version 2. It will also entail an airdrop of new LUNA tokens to holders on the old blockchain.

Is TFL’s exclusion from the blockchain premediated?

In the interview from 2021, Kwon says that if Terraform Labs were to be in a position where it could not “best serve the community,” the firm would “pull the trigger,” and cut all ties to the blockchain.

With responsibility over the Terra crash now falling directly on Kwon and TFL, such a scenario may be playing out. Kwon had called the move a “Protocol Armageddon.”

We pull the trigger and 24 hours later, we’re gone. We burn all our assets, we cut all of our ties, and its nothing. That’s just in case things move a little bit faster than we’re anticipating.

-Do Kwon

The exact wordings of the Terra recovery proposal, which is currently being voted on, are “TFL’s wallet will be removed in the whitelist for the airdrop, making Terra a fully community owned chain.”

Did TFL know the Terra crash was coming?

The interview has now fuelled speculation that the Terra crash was planned by TFL. But Twitter user @FatManTerra, who dug up the interview, says Kwon’s comments may not have been malicious, but rather an additional decentralization measure.

Still, other users noted reports that Kwon had moved TFL to Singapore from South Korea just a week before the Terra collapse. Kwon’s proposal to hard fork the chain had also attracted criticism from several notable crypto voices, including Binance CEO Changpeng Zhao.

But so far, LUNA holders appear to be on board with Kwon’s plan to hard fork the chain and airdrop new tokens. Roughly 80% of voters approve the proposal, while 14.8% have voted against it and invoked veto powers.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn’t trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns.
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