I’m in full support of this proposal, and I urge governance participants to vote in favor of reopening the IBC channels between Axelar and Terra.
Work by the Phoenix Directive, Terra’s new community-run chain management organization, has fully addressed the exploit that occurred in July. They have patched the vulnerability, passed a blockchain-wide governance proposal to fully fund the recovery from the exploit, and secured $3M in funds to rectify the current imbalance. Reopening the IBC channels aligns with these recovery efforts, while also encouraging arbitrage and trading activity to help finish the job.
To ensure fairness and transparency, Terra (as led by Phoenix Directive) will burn the recovered Axelar assets. This will restore the integrity of the Axelar-Terra bridge, and maintain parity across both chains. Furthermore, Terra will convert any non-Axelar assets to Axelar equivalents, reinforcing stability and trust in the network.
Reopening IBC channels is not just a win for Terra; it also supports the broader Axelar network. Reactivating the channels will create opportunities for traders and arbitrageurs to capitalize on discounted assets, driving activity and value for both ecosystems. This mutual benefit strengthens the interoperability and financial health of both chains.
Reopening the Axelar channels allows important frontends like Axelar and Squid to resume seamless routing of assets to Terra. This will enhance user experience, making it easier for participants to transact, trade, and engage with the Terra ecosystem. Functional integrations are essential for attracting new users, retaining current participants, and fostering innovation in defi more broadly.
The Phoenix Directive continues to demonstrate its implacable commitment to restoring Terra with patience, professionalism, and integrity. Since taking a leadership role in the community, it has rectified this exploit, improved security, created the very successful Liquidity Alliance to propel the growth of cross-chain liquidity on Terra, and given direction and hope to a sizable community of die-hard defi stalwarts who still believe that a decentralized economy requires decentralized money.
Please vote in favor of reopening the IBC channels!