Rebooting the billion-dollar Terra LUNA project
Terra 2.0 native token LUNA looks like it might have some life after all. After a 76% drop in value upon launch caused by sell pressure from airdrop recipients, the initial drop in value looks to be correcting. Now, as the dust settles on the biggest upset in crypto history, what’s the outlook for the once highly acclaimed blockchain and its controversial CEO, Do Kwon?
The arrival of Terra 2.0 is something that could only happen in the crypto space. Where else can a company lose more than 40 billion dollars in two weeks, simply fork their blockchain and reboot the whole operation to a mixed reception?
The new LUNA token debuted on May 28 at $18.87, with a total supply of one billion. Within just six hours, the price had dropped more than 76% to $4.39. One primary reason for this will have been unvested LUNA airdrop receivers selling en masse to try and recover some of their lost funds. Once the dust settled, the price climbed and almost doubled from its low of $4.39 to around $9.50 three days later. Sure, it will be. rocky ride, but if key resistance can be found at $6, $8, and $10 then things could be moving in the right direction for Terra 2.0.
It’s too early to look at any trends, but new LUNA appeared to find support at $4.00 pretty soon after bottoming out and has since found support at $6.00 and $8.00 over the last few days. While some may be kicking themselves for selling immediately, the debut price of LUNA pales in value to how it looked just a few weeks ago, at around $90.
Some people could have invested in LUNA before August 2021, when the value was below $18, and broke even by selling early. All is fair in love and war.
The next few weeks will be vital as LUNA 2 tries to find support and build buy pressure and demand to help it regain its former glory. Old LUNA, or LUNA Classic, LUNC as it’s now known, had weathered the bear market nicely and even found gains as other projects floundered. Until things started to unravel with UST, Terra looked on track to keep building on early success.
That’s the difference here. Of course, the new Terra 2.0 doesn’t have the UST stablecoin or any massive curve pools feeding the community staking teet. Terra 2.0 is back to being a good old, decentralized, community-owned network again. Right?
The future outlook for Terra and LUNA
The airdrop raised eyebrows as the old LUNA tokens were replaced with LUNA 2.0 tokens. More importantly, only 30% of the tokens have been distributed to holders, with the rest automatically staked. Moreover, it only points to investors not doing their research as they were quick to complain, but as Terra’s CEO points out, it was there to be read.
There is also something to be said about how the Terra community orchestrated the on-chain governance and voted to enact the proposal. Doing it this way follows a democratic process, but only 200 million votes favored the move to a new chain, while there were 7.5 trillion tokens in existence. Still, a process was followed.
Of course, tribes are forming around the two tokens, and some believe Luna Classic (LUNC) will take on the cult status and find its way back to relevance, while others don’t see the point of flogging a dead horse. Like in the tweet below, some think it’s laughable to support Terra 2.0 and that the reboot potentially just means another rug pull.
Terra 2.0 gets support
The new LUNA token is listed on major exchanges like Huobi, KuCoin, Binance, and Kraken already, which shows to some extent, the broader industry’s support for the reboot. The new Terra 2.0 Twitter page has amassed almost 18,000 followers quickly. Social signals look strong with the hashtags luna2 and LUNC trending on Twitter over the past few days. It almost feels like nothing ever happened!
It’s worth noting that the price has varied greatly on the different exchanges, primarily attributed to the trading volume. At writing, CoinGecko shows that LUNA generated around $550 million in trading volume over the past 24 hours, with more than 33% of that trading volume coming from KuCoin. Additionally, the world’s leading cryptocurrency exchange regarding trading volume, Binance only launched LUNA trading on May 31st. Hold on to your hats, people. The Terra saga is only just getting into second gear.
On May 5, the total value locked in the Terra DeFi dapp ecosystem was around $32 billion. Today it’s a little more than $53 million. While the death of UST and old LUNA wiped out most of that value, the dapps that captured it are still operational and must now start again. It will mostly be interesting to see who sticks around to serve the Terra and LUNA community with services and if they will also support LUNA Classic.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds positions in various cryptocurrencies, including BTC, ETH, and RADAR.