Temporary Suspension of Phoenix Directive Alliance Rewards

[Vegas]

Temporary Suspension of Phoenix Directive Alliance Rewards

I would like to propose temporarily suspending the Alliance inflation rewards currently allocated to the Phoenix Directive treasury.

Background

The Phoenix Directive was originally established as a community initiative to support the development, maintenance and long-term growth of the Terra ecosystem.

As part of its funding arrangement, a dedicated Alliance virtual token (VT) was created with a reward weight of 14%, allowing the Phoenix Directive treasury to receive a share of Terra’s staking rewards.

However, circumstances surrounding the Phoenix Foundation have since changed, and there are currently important questions regarding its governance, leadership, accountability and future direction.

While these matters are being discussed and the community works towards greater clarity, I believe it is reasonable to temporarily pause further inflationary funding.

Proposed change

I propose setting the Phoenix Directive VT Alliance reward weight to 0%, with both its minimum and maximum reward weight also set to zero.

The intention is to:

• Temporarily stop further inflation-derived staking rewards from being allocated to the Phoenix Directive.
• Keep the existing Alliance asset registered and operational.
• Leave existing treasury funds and previously distributed rewards untouched.
• Make no changes to other Alliance assets or Terra’s overall inflation and staking parameters.

Temporary measure and review

This suspension should remain in place until the community has sufficient clarity regarding the Foundation’s governance, accountability, management of funds and future direction.

Any restoration of the previous reward allocation should require a new governance proposal and community approval. There should be no automatic restoration.

{

“denom”: “factory/terra16st8yfprkdl06kccktshd3p2vccq93xcn9mkhjl8s4jumyjtd4kqye0me5/vt”,

“reward_weight”: “0.000000000000000000”,

“reward_weight_range”: {

"min": "0.000000000000000000",

"max": "0.000000000000000000"

}

[terra1hr7svdp2rga9vf3ry95sx7g5wyspgwmg94qac8]

I share the concern about continuing funding while these governance questions remain unresolved. If funding is paused, the community should agree what would justify restoring it at the same time.

Before this goes on chain, I would like to see:

- **A Treasury position:** current liquid funds, existing payment obligations and the cost of keeping essential services running during a pause.

- **Specific conditions for restoration:** published conflict disclosures and independent payment approvals; milestone acceptance records; and completion of the promised contract handover or an approved alternative with clear limits and an expiry date.

- **A review process:** who will check those conditions, what evidence they will publish and when the community will review progress. Restoration would still require the new governance vote you propose.

- **Technical verification:** confirmation of what setting the reward weight and its bounds to zero would change, including any effects on other rewards, validator weights or governance voting power.

I support independent examination of the security and conduct concerns raised in A272, including the relevant actions of all four directors. These funding conditions should apply regardless of the outcome of 4853 or who remains on the board.

I would assess a suspension proposal against those conditions and the arrangements for existing obligations. “Sufficient clarity” leaves too much unresolved for voters deciding when funding should resume.

[Vegas]

Thank you for your thoughtful input. I agree that these points also need to be addressed, particularly the conditions for restoring funding, treasury transparency and independent oversight.

I see two possible approaches: either we put forward a more comprehensive proposal addressing all these matters together, or we start by stopping the bleeding and deal with the wider governance, accountability and restoration framework as a subsequent step.

That said, if the community feels it would be better to address everything together from the outset, I’m all ears. I’m happy to work towards whichever approach the community believes is best.

[Raider]

I would again keep it very simple - the suspension of Alliance rewards remains in place until an expanded 7 member board and 5 of 7 multisig threshold is established (with new members proposed and selected through chain governance).

Until then any essential spending for chain maintenance that isn’t covered by existing PD funds would have to be approved through chain governance as one-off CP spend proposals (which is how PD started out funding themselves anyway, so should not be a big deal as a temporary measure).

[terra1hr7svdp2rga9vf3ry95sx7g5wyspgwmg94qac8]

We don’t need to resolve every governance issue before voting on a pause.

But the proposal should specify the restoration conditions, who will assess them, and a date for publishing that assessment. A Treasury position and technical verification should also be available before voting starts.

The review date would not trigger automatic restoration; that would still require a separate governance vote.

[Seb]

I’m with PFC on this, we dont need to resolve every governance issue before voting on a pause.

Draft’s 63 and 64 are a good start better than a completely pause.

[cryptobull]

Against Suspending the Phoenix Directive Alliance Rewards

Let me be direct. This proposal is a mistake. Not a small one. It puts at risk the only coherent development pipeline Terra has right now.

You want to pause 14% of Alliance inflation going to the Phoenix Directive treasury because of “governance questions.” I get the instinct. Accountability matters. But look at what you’re actually voting on. You’re not voting to “review.” You’re voting to defund work that is already running while a debate happens in the background. That’s not caution. That’s sabotage dressed as oversight.

Here’s the thing about Alliance rewards. They are not a grant. They are not charity. They are performance-linked compensation for infrastructure that keeps Terra functional. The Phoenix Directive didn’t just ask for 14% and disappear. It shipped. It coordinated. It kept the lights on.

What Philip and the Directive actually delivered

Creda Finance came back. Native lending and borrowing returned to Terra after being absent. That is not a press release. That is a money market. It works with Liquidity Alliance assets. It lets users borrow, lend, and build strategies on-chain again. Without Creda, Terra DeFi is half-built.

Eris Protocol built the Terra Liquidity Alliance into a functioning ve(3,3) coordination layer. LSTs get locked. Voting power directs weekly incentives. Liquidity flows where the ecosystem needs it. That infrastructure exists because someone organized it. That someone was the Directive.

Votion.money launched as a governance aggregator on top of the Liquidity Alliance. Solid and Capa got funded and shipped a decentralized stablecoin stack. Big Labs built a second front end for the Liquidity Alliance. Chain upgrades kept shipping. The $3 million POL deployment moved idle treasury assets into revenue-generating liquidity.

You want to zero out the reward weight for the team that did this? While the work continues? Be honest about the signal that sends.

The “temporary” pause is permanent in practice

Read the proposal text carefully. Reward weight goes to zero. Minimum and maximum also go to zero. Restoration requires a brand new governance proposal. No automatic return.

You know how governance works here. Getting anything through takes months of forum drama, validator lobbying, and vote whipping. A “temporary” pause with no automatic restoration is a soft termination. The work doesn’t pause. The people don’t pause. The obligations don’t pause. Only the funding does.

A responder on the forum already flagged the gap. Before voting, the community needs a treasury position, specific restoration conditions, and a review process. None of that exists in this proposal. You’re being asked to pull the plug first and figure out the restart conditions later. That is not governance. That is a gamble with someone else’s operational runway.

VegasMorph’s record speaks for itself

The proposer has spent four years on LUNC. What did that produce? A chain that still struggles for daily on-chain volume. A trail of proposals that generated discussion and little else. Now the same playbook arrives on LUNA 2.0.

The pattern is familiar. Create a governance crisis. Frame it as accountability. Defund the thing that works. Move on. If you have watched LUNC governance long enough, you recognize the rhythm.

The technical reality of zeroing the reward weight

The Alliance VT contract is tied to the Phoenix Directive treasury. Set the weight to zero and you don’t just stop new inflation. You change the incentive calculus for every validator and staker who interacts with Alliance assets. You create uncertainty around a contract that is supposed to be stable infrastructure.

Alliance modules work because participants trust the reward schedule. Flip that schedule to zero and the trust premium disappears. The asset stays registered. The contract stays live. But the reason to engage with it evaporates. You don’t need to be a protocol engineer to see that.

What you should do instead

If you want accountability, demand it without defunding. Ask for the treasury disclosure. Ask for the conflict disclosures. Ask for milestone records. Put those conditions in a separate proposal. Do not tie operational funding to a review process that has no defined endpoint.

The Phoenix Directive is not perfect. No organization is. But the answer to imperfect governance is not to starve the only team shipping infrastructure on Terra. You know it. I know it.

Vote :

VETO NO on this proposal.

[Lorddonkeykong]

I couldn’t have said it better anything proposed by long time LUNC community members that have delivered nothing should be treated with extreme skepticism. vote no with VETO!