Early on Wednesday morning, voters approved a proposal to create a new Terra blockchain two weeks after its signature cryptocurrencies Luna and the stablecoin UST collapsed in crypto’s version of the 2008 Lehman Brothers meltdown.
The vote easily passed with 65.5% approving the proposal, and Luna crypto holders had each token count as equal to one vote. Some supporters have said that creating a new chain is one of the only ways that would help recoup some of their losses, while giving those who build applications on the blockchain a place to migrate too instead of looking for alternative blockchains to build on.
But not everyone was in agreement. Several “validators,” or individuals and organizations that validate transactions on the Terra blockchain, voted no, including blockchain infrastructure companies Figment, Stake Systems, and DRSV, according to Terra Station, the official wallet of the Terra blockchain.
Figment, a Canadian-based blockchain infrastructure and services provider that employs 225 people, used its 1.6% of voting power to vote against the proposal. Head of Protocols Clayton Menzel said the company had at one point chosen to abstain, but after the original vote put forth on May 18 was amended by Terraform Labs chief Do Kwon after many stakeholders had already voted, the company changed its stance.
“It’s irrational to be changing the outcome of a proposal during a voting period, because there’s probably plenty of people that voted yes, on a version of it, that may not be voting anymore,” Menzel told Coins2Day.
When he initially put forth the proposal, many on social media protested against Kwon’s intention to make it a “living document,” and questioned whether the vote could be amended after people had voted. That is in fact exactly what happened.
On May 20, two days after the original proposal went live, someone from Terraform Labs amended the proposal to “accommodate community feedback,” according to Terra Station. The changes in the amendment changed how Luna tokens would be distributed to supporters if the vote passed.
Figment isn’t the only validator that disagreed with how the Terra vote was run.
Konstantin Boyko-Romanovsky, leader of Allnodes, a blockchain infrastructure company, also voted no. He told crypto media outlet The Block that he was concerned that Kwon and Terraform Labs pushed the vote forward despite an earlier online poll to the community, posted to Terra’s research forum on May 16, that showed at least 90% of 6,220 participants were not in favor of the proposal.
“We didn’t like the fact that the whole governance process of this proposal looks like a dictatorship model,” Boyko-Romanovsky told The Block. “It looks like the launch of [the] new chain is decided even before voting is finished.”
Allnodes did not immediately return Coins2Day’s request for comment.
Menzel said Figment has proposed similar votes on other blockchains. In his experience, changing a proposal after voting has already started is highly unusual. Even the way that the vote was created was different from other votes on the blockchain, he said.
Usually, a governance proposal that affects how a blockchain works, similar to the Terra proposal, would be coded so that a specific outcome would automatically occur after the proposal was accepted or rejected. In the case of Terra’s proposal, the vote was done on the blockchain, but the actual proposal was text on a website “off chain” that could be edited.
“It’s bad governance to be actively changing the proposal,” he said. “After one person has voted, you should never be able to change the proposal.”
Terraform Labs did not immediately respond to Coins2Day’s request for comment.
Apart from how the vote was run, Menzel said Figment also voted no because it didn’t want to possibly be exposed to any future lawsuits that center around the collapse of UST and Luna.
“Voting yes, creating a new token, creating a new chain, and air dropping tokens to people could have legal implications as well for agreeing to do that,” he said.
Menzel said he could not comment on whether Figment would continue to support the Terra blockchain, but that the company would make an announcement after the vote had closed.
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