Finally breaking his silence after the recent collapse of the Terra ecosystem, founder Do Kwon came up with a revival plan for the Terra blockchain network. Furthermore, the founders also stated that they should deploy their bitcoin reserves for the rescue plan.
However, it won’t be as easy for LUNA 2.0 and Terra to reinvent itself as a formidable Layer 1 platform. Popular cryptocurrency analyst Miles Deutscher shared some interesting points in this regard.
In his revival plan, founder Do Kwon talks about Terra having a “vibrant developer ecosystem” and “strong brand identity”.
To preserve developers and the ecosystem, Do plans to “reorganize the chain”. As Terra plans to pivot to a full L1, it acknowledges the fact that UST and Luna do not exist in their current form.
Now, the Terra ecosystem was backed by some of the biggest venture capital firms like Galaxy Digital. Why would they continue to re-invest in a system that was burnt to ashes in a matter of days?
Furthermore, it would be difficult for them to persuade their investors to put their money back in one of the biggest failed projects in the history of crypto. In fact, we know that the Terra community is the largest. However, investor confidence will no longer be the same. Furthermore, reports suggest that Do Kwon had previously failed a stablecoin project called “Basic Cash”.
Future development and user acquisition became a difficult task
Analyst Miles Deutscher says it will be difficult for Terra to achieve those valuations once again. In his recent tweets, Deutscher writing,
“Remember, crypto valuations are based on future developments. That’s why we have seen valuations in the tens of billions for L1s with hardly any transaction volume. But with Terra’s reputation being so damaged, new users/investors are getting hit. Acquisition becomes challenging.
Likewise, for Terra to command a comparable valuation, it would need to factor in massive growth. Where is this growth coming from? Acquisition of new investors and users. This acquisition becomes increasingly difficult when you lose industry trust.”
Furthermore, he said that without UST, Terra’s technology would give it no advantage over other Layer 1s. Thus, it would be even harder to believe that LUNA 2.0 will be the place to invest. On the other hand, it would also be difficult to draw capital for smaller projects to build and develop dApps on Terra.
Deutscher says there’s some hope for a revival of Terra, provided that it’s as community-driven as the Phantom.
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