The infamous Terra (LUNA) and TeraUSD (UST) crash earlier this month has rocked the entire crypto sector. The accident was so horrific that even after a fortnight, the property could not be recovered. However, Do-Kwon, the founder has now come up with a revival plan that primarily suggests the creation of a new series called Terra (LUNA), while the old one is to be rebranded into Terra Classic (LUNC).
Now that LUNC and LUNA are both on the battlefield, which one will jump with flying colors?
Before digging deeper into history, let’s take a look at the chain of events that led to the creation of LUNA 2.0!
About the Crash-In Brief!
Despite the sideways trend of the major crypto assets in the market, the price of Terra (LUNA) was moving higher and secured its position in the top 10. Everyone trembled when an anonymous trader dumped around $286 million UST on Curve and Binance, perhaps to check the stability of this algorithmic stablecoin – UST. And as UST was backed by bitcoin, the Luna Foundation Gourd (LFG) emptied its BTC wallet containing over 80,000 BTC.
Hence, as expected, BTC prices fell, dragging down the entire crypto space, including UST. And since the peg was highly correlated to the price of LUNA, LUNA also fell into an almost non-recoverable position. Furthermore, FUD hovering within the crypto space affected USDT as well, but it quickly recovered. However, the algorithmic stablecoin that has been criticized by many has literally failed the stress test.
post-crash math
The after-effects of the crash are still being held within the crypto space, where almost all assets, including bitcoin, are swinging within a narrow range. On the other hand, the price of Luna remains heavy at press time, while UST continues to post huge losses every new day. And so this extreme volatility kept many traders away from the asset, while most exchanges temporarily suspended LUNA and UST trading.
On the other hand, due to this accident many people lost their lifetime savings, forcing some to take drastic measures. In addition, the founder and executives of UST were sued by investors. Therefore, after the siege, Terraform Labs was immediately disbanded, while the legal team resigned. Amidst all the unrest, Do-kwon proposes a revival plan.
LUNAtics vs Do-Kwon: LUNA Burn vs Revival Plan
The algorithm states that whenever UST loses its peg, new Luna tokens will be mined and some UST will be burned to stabilize the peg at $1. On the other hand, if the UST peg exceeds $1, the LUNA will be burned, adding a new UST to circulation. Due to this mechanism, the price of LUNA fell sharply as the circulating supply increased by more than 10x.
Therefore, the community and some well-known figures in the crypto space demanded the burning of the additional mined LUNA tokens. Whereas the founder, Do-Kwon after providing the dead wallet address said that it is ‘futile’.
On the other hand, Do-Kwon came up with a revival plan which was recently passed with a majority. In addition, according to schedule, the new LUNA chain has been deployed, while the first, the Genesis Block, has already been prepared.
So what was in the revival plan and how was the vote done?
Luna 2.0 – Revival Planning and Voting
The plan proposed by Do-Kwon mainly includes
- Rebranding Existing Terra Blockchain to Terra Classic and LUNA Token to LUNC
- Previous holders of LUNA and UST will receive new tokens via airdrop
- Investors holding more than 10,000 tokens will receive 30% initially and the remaining 70% will be issued over the next few years
- Whales with more than one million LUNA may not receive their tokens for a year from now, while the vesting period may extend further to approximately 4 years.
However, a major drawback of this revival plan is that the founder has completely marginalized the algorithmic stablecoin – UST. And so recently another resolution was passed to burn about one billion UST tokens. Yet the revival plan was passed with over 65% of the vote and went live moments ago.
Motion voting and its flaws
It is a known fact that if there are more than 6 trillion LUNCs in circulation, the holders can also be in the billions. In fact, South Korean holders have multiplied since the crash. On the other hand, whale holdings have also accelerated as the assets now available are at very discounted prices. And hence it may indicate that a significant price action could be coming very soon for the LUNC price.
On the other hand, there is a lot of criticism swirling around the LUNA 2.0 launch. Many recommend staying away from Luna as the future of the coin is extremely uncertain. What is making some traders unsure about LUNA 2.0? let’s watch,
community and voting
The Luna community is created to participate in voting on proposals related to network development. Like many other voting processes, the longer you hold LUNA, the more you have the right to vote. And so it is speculated that some addresses filled with LUNA or Terra blockchain Projects like Mirror Protocol Used exclusively for voting purposes.
Luna Air-Drop and its drawbacks
It has been announced that old LUNA and UST holders will receive an air-drop of the new LUNA token. Everyone is eligible for an air-drop, regardless of whether the holders are before or after the crisis. And so it was completely unfair to the traders who bought the LUNA token at a very high price.
The main problem here is where Do-Kwon will bring the liquidity to generate value for the new LUNA token. Will he use the money he earns from staking LUNC tokens? Since receiving the LUNA air-drop requires LUNC holders to stake their tokens!
No offer for bitcoin liquidation
After the crisis, Terra bought several proposals, voted on and later finalized the next plan of action. But when the very important step of emptying his BTC wallet had to be taken, no such process was followed. Undoubtedly, founders Do-Kwon and Terra may have had some veto, but voting on bitcoin reserves was inevitable as even a novice could understand that a flood of 80,000 BTC in the market could cause a huge price drop.
LUNA Value vs LUNC Value: Battle for Supremacy
It is now very clear that LUNA 2.0 is completely under the control of the founder, Do-Kwon, who handled the accident badly. There is no doubt that additional mining could not have been prevented, but as USDT burns 3 billion tokens to stabilize its peg, Do-Kwon could have taken the same step. But he insisted on going for a new series without filling the gap of the old series.
LUNA, on the other hand, is expected to be more community-driven and recently added giant whales to compete with the inside Whales – the Luna Foundation Guard! Therefore, after surviving the crash and its aftermath, traders may never again have complete confidence in the Do-Kwon. And this may affect the price of LUNA in the future.
Adding to the substance, the proposal to burn LUNC and UST has already been given and passed. Hence, with the blaze igniting, the prospect of price stability appears to be at its maximum. When Do-Kwon provided the dead wallet address, over $280 million worth of LUNC was burned in a single day, which increased the value of LUNC by over 70%. And if billions of tokens are burned, the dream of LUNC price stabilizing above $1 may come true.
Altogether
Overall, some analysts still believe, it was a well-planned attack, very well executed, which is now, perhaps, being cashed in very well. However, the future of LUNA may be a bit uncertain for a few days while LUNC may gain more confidence in the coming days.
Still how many analysts are advising traders be very careful With LUNA 2.0 because they believe LUNA will be largely dumped after its launch.