- Changpeng Zhao says that projects should not emphasize minting
The May 13 post came after CZ said that the Terra team did not acknowledge or adhere to the suggestions of the Binance team in the wake of the crisis that rocked the Terra blockchain.
Minting Doesn’t Work for Downturns Every Time
The Binance CEO, Changpeng Zhao says that projects should not lay emphasis on minting more assets during downturns. The Binance executive made the comment in a post monitored by Cryptoinfowatch on May 14. The May 13 post came after CZ said that the Terra team did not acknowledge or adhere to the suggestions of the Binance team in the wake of the crisis that rocked the Terra blockchain.
Terra’s stablecoin depegged from the USD and is currently trading below a dollar. Its internal currency, LUNA, also lost value with the loss of confidence from investors.
Since then, the Terra team have been promoting the digital currencies by asking users to submit their wallet addresses. This has raised speculations that the team intends to mint more tokens that will be distributed through airdrops.
In his Twitter post, Zhao wrote:
“You Can’t Mint Your Way out of bankruptcy all the time”
Value Instead of Incentives
CZ also said that minting of tokens does not add value to an ecosystem. The activity is at best, a bootstrapping strategy. Projects that want to make impact should focus on adding value to people.
The design flaw: minting coins (printing money) does not create value, it just dilutes the existing coin holders.
Incentives doesn’t create value. It is just a bootstrap mechanism.
Build products people use.
— CZ 🔶 Binance (@cz_binance) May 13, 2022
The Terra team has since announced an action plan for recovery. The network was halted a number of times on Friday before restarting. The validators are working to ensure that the security of the blockchain network is not compromised.
DO Kwon Heartbroken
Do Kwon, the co-founder of Terra has expressed regrets over the actions that led to the crash of the Terra tokens. In a May 14 Twitter post, Kwon wrote:
“I’ve spent the last few days on the phone calling Terra community members – builders, community members, employees, friends and family, that have been devastated by UST depegging.
I am heartbroken about the pain my invention has brought on all of you.”