Rebooting the billion-dollar Terra LUNA project
The controversial CEO revived the project after the Terra crash, with the creation of a new chain Terra Classic (LUNC). Now, Interpol has issued a red warrant for Do Kwon worldwide. What could this mean for the industry? Let us examine the Terra saga.
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?
More interestingly, Terra Luna Classic (LUNC) is up 35% at the time of this writing despite the recent news of South Korea requesting Do Kwon´s arrest.
The South Korean authorities have accused Kwon of financial fraud after the Terra debacle wiped out approximately $40 billion of hundreds of thousands of investors’ money.
What happened with Terra?
The failure of Terra’s LUNA and UST tokens sent waves of fear through the industry. First of all, it reinforced the decline of the price of BTC, while also knocking other stablecoins off their pegs. Moreover, the Terra downfall restated concerns from onlookers and investors about the viability of the stablecoin asset class.
The total value locked in DeFi is down from $224 billion on May 1 to $54.58 billion at writing. Many traders have also moved crypto out of DeFi protocols and into stablecoins like USDC and USDT with plans to redeem for fiat.
Additionally, it triggered a domino-effect wiping out high-profile crypto hedge funds like Three Arrows Capital, severely impacting the industry at large.
LUNC and its debut
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 might 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.
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.
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 for staking.
Terra 2.0 gets support
The new LUNA token is listed on major exchanges like Huobi, KuCoin, Binance, and Kraken which shows the broader industry’s support for the reboot.
The future outlook for the crypto industry after Terra
Regulators are taking note of how to prevent another Terra debacle. U.S. lawmakers propose to introduce a ban on UST-like algorithmic stablecoins, potentially threatening other decentralized dollar alternatives like MakerDAO’s DAI.
Worldwide, regulators are pulling out their hammers and using the Terra crash as a poster child for why crypto can threaten the global economy.
Unfortunately, cases like this can set a bad precedent, and many times, regulators fail to understand the technology and the wider implications, thus hindering innovation.
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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.