Shifting Fortunes?
The previous iteration of LUNA, now rebranded as Luna Classic (LUNC), continues to exist. It experienced a significant drop of over 20% following the release of LUNA 2.0. While scalpers and traders may continue to engage with LUNC, Terraform Labs CEO Do Kwon and his team have fully redirected their efforts toward their new blockchain.
The decision to create the new Terra blockchain came after a governance vote last week, in which 65.5% of votes were cast in favor of Do Kwon’s proposal. It has been more than two weeks since the previous Terra blockchain suffered a malicious attack that caused the de-pegging of its algorithmic stablecoin UST and led to the subsequent collapse of the LUNA token. The new blockchain has completely moved away from UST and aims to focus on rebuilding the Terra ecosystem.
The creation of the new blockchain has been a controversial move. Many investors took to Twitter to express their frustrations, demanding a large burn of LUNA to restore its former value. At its peak, LUNA had reached an all-time high of $120, but it had plummeted to nearly worthless levels. The algorithmic mechanism caused new LUNA to be minted continuously after the de-pegging of UST, resulting in hyperinflation. In the aftermath of the attack, the total supply of the coin skyrocketed from 346 million to a staggering 6.5 trillion.
Restoring the Community
LUNA and UST holders saw their investments rendered practically worthless, with approximately $40 billion in value erased. Those who held LUNA before the crash received an airdrop of new tokens, though their value was much lower. Those who bought after the crash also received a smaller airdrop. Terraform Labs is focused on rebuilding the essential community with these airdrops. However, this may have contributed to the rapid decline in the value of LUNA on its first day, as disappointed former holders sought to recover some of their losses. In addition to the initial airdrop, these holders will receive more tokens over time, subject to a vesting schedule, which could result in further volatility as the new blockchain establishes itself.
Many projects that were initially built on the original Terra blockchain expressed their continued support and migrated to the new Terra 2.0. However, some competitors saw the collapse of LUNA as an opportunity. Ryan Wyatt, CEO of Polygon Studios, announced the creation of a multi-million dollar fund to help Terra projects transition to the Polygon blockchain.
The prices of prominent Terra tokens remain highly volatile: ANC, the token of the Anchor Protocol lending platform, dropped from $2.30 before the crash to less than 2 cents, though it is now trading at around 27 cents. The token for the Mirror Protocol, MIR, also experienced wild price swings, dropping from 19 cents to a local high of 63 cents, before falling back to around 30 cents. These tokens, along with others from the Terra blockchain, are being closely watched by many crypto investors due to their dramatic price movements.
Framtíðin er enn óviss
The future of LUNA 2.0 is still unclear, and the situation is far from settled. For the new blockchain to succeed, Terra must regain the trust of investors and foster the development of new projects on its platform. With the new blockchain only being a few days old, its future remains up in the air. Meanwhile, Terraform Labs continues to face the threat of legal action, with five South Korean investors filing a lawsuit against Do Kwon. The story of the Terra collapse is far from over, and crypto enthusiasts worldwide are keenly observing its next chapter.
