Buterin believes Terra’s recovery plan should prioritize small holders

Ethereum co-founder Vitalik Buterin says he supports the reimbursement proposal suggested by Twitter user PersianCapital.

A stock photo featuring piles of coins under the blue umbrella.

The collapse of the Terra ecosystem left many without their life savings, raising questions on whether the project will recover investor losses. The Twitter user account named PersianCapital came up with the proposal to focus on the bottom 99.6% of wallets and reimburse 100% of their UST deposits on Anchor protocol since the vast majority of UST holders were retail investors.

There are 256k wallets on Anchor, and the top 1000 wallets own 82% of UST, PersianCapital tweeted. By prioritizing retail investors instead of returning 30 cents for every UST for everyone, Terra would improve community sentiment and make more people 100% whole, the user concludes.

The idea was supported by Vitalik Buterin, who pointed out that retail investors may have been misled by influencers promising 20% APY in USD. Ethereum co-founder also implicitly stated that whale UST holders could cop their losses.

Buterin pointed out that financial deposit insurance can be a helpful tool to protect investors. The obvious precedent is FDIC insurance (up to $250k per person). “An interesting unrelated one is Singapore employment law. Stronger regulation for low-earning employees, and a more figure-it-out-yourself approach for the wealthier. IMO things like this are good hybrid formulas,” Vitalik tweeted.