  We prove that the open subvariety $\operatorname{Gr}_0(3,8)$ of the
Grassmannian $\operatorname{Gr}(3,8)$ determined by the nonvanishing of all
Pl\"ucker coordinates is sch\"on, i.e., all of its initial degenerations are
smooth. Furthermore, we find an initial degeneration that has two connected
components, and show that the remaining initial degenerations, up to symmetry,
are irreducible. As an application, we prove that the Chow quotient of
$\operatorname{Gr}(3,8)$ by the diagonal torus of $\operatorname{PGL}(8)$ is
the log canonical compactification of the moduli space of $8$ lines in
$\mathbb{P}^2$, resolving a conjecture of Hacking, Keel, and Tevelev. Along the
way we develop various techniques to study finite inverse limits of schemes.
