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Terra-LUNA announces a recovery plan, "LUNA 2.0": Here is how it has performed so far!

PUBLISHED May 31, 2022, 7:00:32 PM        SHARE

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imgTobi Opeyemi Amure

May 2022 was a rollercoaster month for the Luna-UST family as the crypto duo hit new all-time-lows, $0 for Luna and 0.1 for UST. No crypto investor would have imagined that Luna, which was booming at an all-time-high earlier in the year, would plummet to lay flat at $0. As astonishing as the recent turn of events in the Terra ecosystem is, the founder, Do Kwon, and his team have made unrelenting efforts to save Luna and UST. The following describes the cascade of events ever since, right into the recent Terra 2.0 project that is currently underway.

Luna & TerraUSD: Then & Now

The descent of UST started on the 9th of May, 2022, when the stablecoin lost its one-dollar peg to below fifty cents. This spurred crypto traders to convert their UST assets to other stablecoins while shorting LUNA, causing the price of both coins to dip to lower values. The Terra foundation sought measures to restore the peg of UST. They minted more Luna in hopes that it'll restore UST to its peg, but it only resulted in an increase in the supply of Luna without a corresponding positive effect on UST. The foundation's next action was to sell a 1.5 billion dollar worth of Bitcoin from the Terra treasury for UST. But, this effort ended in waste as the UST did not rebound to its dollar peg. The downtrend of Luna from an all-time high of $119 in April 2022 to $0 was quick with continuing inertia to resurgence. The TerraUSD, which relies on Luna to maintain its peg, dipped to $0.02 and has struggled to climb higher. After a few weeks, Do Kwon, founder of Terraform Labs, came up with a plan to save Luna and UST by creating new versions of the coins. Let's delve into the proposed terra 2.0 plan in detail.

Terra 2.0

After weeks of the UST depeg with no hope of revival, Do Kwon proposed a recovery plan to the Terra community. The new plan, which can be called the Terra 2.0 recovery plan, entails that the Terra blockchain would be forked into a new Terra chain. The old Terra chain with the old Terra Luna and TerraUSD is now called the Terra Classic. Hence, the old Terra Luna is now Luna Classic (LUNC), and the UST is referred to as TerraClassicUSD (USTC). The new plan was proposed to the governance community of Terra, and the majority voted the plan should proceed as stated. Hence, the defi services on the previous Terra chain were moved to the new one, and a new Terra Luna coin was launched on the 28th of May 2022. However, TerraClassicUSD (USTC) was not migrated to the new Terra chain, and the founder said there'll be no updated version of the stablecoin. Currently, USTC remains a defunct stablecoin without any hope of it regaining its dollar peg in the future.

Terra Luna (LUNA) performance on Terra 2.0

After 65% of the Terra community voted for the recovery of LUNA, the new Terra Luna launched on major crypto exchanges on the 28th of May 2022. The coin is currently accessible on Bybit, Kucoin, Huobi Global, Gate.io, Kraken, MEXC, OKX, and other exchanges. Binance had also listed Luna in its innovation zone, which features new tokens with the peculiarity of having increased volatility and higher risk than other tokens. Following the launch of the proposed new and improved blockchain, Terra airdropped Luna 2.0 tokens to the holders of the old Terra Luna tokens on the old blockchain. This move was to help holders of the old Luna coin make up for part of their losses. However, it seemed the holders sold off their Luna 2.0 coins as soon as they landed in their wallets. This could be why the coin tumbled from $18 to $4 on the same day it went live.

Future of Terra Luna

Terra Luna (LUNA) has managed to bounce back from the plunge and is now trading at $9.7 at the time of writing. The decision of crypto investors will determine the future of Terra Luna. Will people still believe in the potential of Luna? Will investors have enough conviction to invest in Luna in the long run? What will Luna be valued at in the next couple of months? And finally, are we sure that Luna won't suffer another massive crash soonest? These questions and more are driving the level of doubt in crypto investors higher and instilling uncertainty about the future of Luna.
Veteran investor Mark Cuban shared his standpoint on the new Terra 2.0 blockchain. According to Fortune, Cuban stated that he wouldn't be investing in the new Luna coin, nor has he invested in the previous TerraClassicUSD (USTC) or Terraclassic Luna (LUNC). The value of a cryptocurrency is based on the law of supply and demand, and the same applies to the new Luna 2.0 coin. If we see the number of users of LUNA increase in the following weeks, it will result in a positive effect on the market. But, if investors and traders do not interact with the coin as much, the price of Luna might stall or descend to new lows.

Read Also: Terra-Luna crashes 98%: Here's Everything You Need To Know

Conclusion

The fall of UST as a stablecoin has planted doubt in the mind of many about the ability of algorithm stablecoins to maintain the dollar peg. Since UST's fall, investors and traders have transited to other stablecoins. The top stablecoins at the moment, according to CoinMarketCap, are Tether(USDT), USD Coin (USDC), Binance USD (BUSD), Dai (DAI), and TrueUSD(TUSD). USDC and TUSD are the two stablecoins that maintain the one-dollar peg accurately. More activity is expected to proceed with Terra Luna as the Terra team continues the Terra 2.0 recovery plan. Luna 2.0 can be a worthy investment in the long term, but it's important to note that the crypto market is marked by high volatility and increased risk.



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