Phoenix rose from the ashes. As a Phoenix, you’re supposed to come back stronger, smarter, and more powerful. So, as Luna 2.0 did. This project most certainly rose from the ashes. However, is it indeed stronger, wiser, or more powerful? However, does Do Kwon know something that we don’t know?
It sure has been a rocky road, and we are about to try to make some sense out of this. We are going to dissect Terra LUNA 2.0 and see what it brings to the table.
What Is Terra Luna 2.0?
This project, Terra LUNA 2.0, is the result of proposal 1623, put forward by Do Kwon. The Lunatics could vote on a few proposals, but this proposal was by far the most popular. 305.98 million people voted, that’s 89.95%!
- 65.5% voted in favor, which translates to 200 million votes.
- 21% abstained.
- 13% voted against the proposal.
- The proposal had half a million views and 5,300 replies. That’s a lot of attention and interaction.
What was proposal 1623? It proposed that there will be a new Luna layer 1 chain. It’s a fork from the old chain. And here is where it gets slightly confusing. Let me put it out clearly for you:
- The old chain keeps going and is now known as Terra Classic.
- As a result, they rename the original Luna token to Luna Classic (LUNC).
- The new chain has a new coin, that will continue under the name LUNA (LUNA).
- UST will continue to live under its new name USTC on Terra Classic. The new fork does not have any UST angle to it
Also, the developer team of the original LUNA will migrate along to the new chain. Many projects on Terra Classic will also migrate.
18/ Terra 2.0 is bringing the same ideals you fell in love with the first time: world-class UI/UX, our amazing #LUNAtic community, and a deep, talented developer pool poised to build the future of DeFi.
Get ready for launch #LUNAtics! 🚀 🚀 🚀
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) May 27, 2022
Moreover, they will find new living quarters on the new chain. For example Astroport, Prism, RandomEarth, among others:
In addition, the release date was May 28th. This went hand in hand with a big airdrop of the new LUNA token. Probably one of the main reasons why this proposal made it. People want to try to salvage as much as they can. An airdrop possibly helps them with that.
How Do We Feel About Terra LUNA 2.0?
It’s been 5 days since the fork but so many questions remain unanswered. Let’s try and address these questions
Terra Luna’s Crash has been a hot and emotional topic and many people got burned. Some even lost all their life savings. Whatever way you look at this, that’s not right.
Jokes about crypto madness aside, this is going to get very grim and very materially real for some people. pic.twitter.com/44T4VNM4eO
— Jacob Silverman (@SilvermanJacob) May 11, 2022
Now, let’s see some questions that everyone is having in their head about Terra LUNA 2.0:
1) Will There Be Trust Again in the New Fork?
Here is our take on it. Binance listed the Terra Luna on June 1, the exchange still carries a warning that Terra Luna is subject to ‘high volatility’ but this hasn’t stopped thousands of new investors from buying up Terra Luna. There is currently a circulating supply of 210 million Luna according to the airdrop. This gives Terra Luna a market cap of $1.34 billion – far below the $70 billion it enjoyed before the crypto collapse.
Some are comparing the collapse to the infamous Bernie Madoff’s $60 billion investor loss event of 2009 who was sentenced to 150 years in prison. Does Kwon’s Terra Luna do the same to its investors? Could Do Kwon face something so harsh?
In 2009, Bernie Madoff lost investors $60 billion. He was sentenced to 150 years in prison.
In 2022, Do Kwon lost investors $60 billion after Luna collapsed to $0. He then created Luna 2.0. pic.twitter.com/CkCC8AKPVR
— Fintwit (@fintwit_news) May 29, 2022
These questions keep haunting us. So for now we would stay away from investing in Luna.
2) What Will Happen to Terra Luna Classic and Its Holders?
All original LUNA holders drew the short straw. In no time, the original LUNA token dropped to 99% of its value. Right now its been proposed that the original blockchain will continue to exist. Co-existing with the new chain.
1/ Block 1 of the brand new Terra blockchain (with a chain_id of “Phoenix-1”) has officially been produced at 06:00 AM UTC on May 28th, 2022!
Congratulations to the #LUNAtic community on this expeditious feat of collaboration 🎉
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) May 28, 2022
We checked out the explorer of Terra Classic and saw some activity there
All current Terra Classic holders will get a share of this airdrop. Terra made two screenshots. Holders of the original LUNA (now the LUNA Classic) were part of the first screenshot. These are the pre-attack holders.
If you bought LUNA tokens after the attack, Terra took a screenshot a few days later. Then you will also get a smaller airdrop. With a supply of 1 billion LUNA, the airdrop allocations are as follows:
- Pre-attack Luna holders: 35%
- Post-attack Luna holders: 10%
- Pre-attack aUST holders: 10%
- Post-attack UST holders: 15%
- Community Pool: 30%. This includes 10% for developers. Luna stakers will control this.
If you had less than 10K LUNA, you receive 30% at genesis. The remaining 70% have a 6-month cliff and a 2-year vesting period. This is good news for small investors and retailers like you and me.
Most of the exchanges support the new Terra 2.0. This means that most people will get their airdrop. However, this is a complicated event, with Terra only having a small team. Keep in mind that not everybody will receive the airdrop at the same time. We see some investors already complaining.
📣 New on Kraken Futures:
$LUNA2 futures contracts live now! Get exposure to $LUNA2 without owning the underlying asset via our powerful and customizable futures trading platform.
*Geo restrictions apply
➡️ https://t.co/LRTEdKXi2T pic.twitter.com/NhDtTJG6Gc
— Kraken Exchange (@krakenfx) June 1, 2022
3) How Will Luna 2.0 Perform?
That’s the one-million-dollar question. How will LUNA 2.0 perform? On May 28th, it all started very hopeful at $18.87 per token.
But what do you think most people in the first airdrop wave did? Right, they were selling their brand-new LUNA tokens faster than they could drop in their wallets. The result? A 75% nosedive on the initial price. It dropped to $4.39 within 5 hours after the release. However, it recovered to around $6, shortly afterward.
Also, on May 31st, it reached $11.33 again. That didn’t last long, though, and currently, it seems to settle slightly above the $6 range. According to Terra information, the market cap is $1.3 billion. They also claim that the current circulating supply is 210 million LUNA tokens.
In the meantime, the LUNA Classic (LUNC) token keeps dropping in price. It starts with 4 zeros.
So, it’s still early days. There are some issues with the airdrops, but Terra tries to resolve them asap. Will this have an impact on the current price of $6? Hard to say. Just like Binance, we can only give the warning to be cautious with investing in either the LUNC or LUNA token. Volatility is high on both tokens.
Also, the new Terra LUNA 2.0 token has a lot to prove. It may be best to sit in the waiting room and see how this develops. Being rekt one time by Terra should be enough.
4) What Shortcomings of Terra Classic Are Luna 2.0 Overcoming
There were a few shortcomings that led to LUNA’s fall. In the new set-up, Do Kwon tries to avoid those mistakes. Before, we mentioned that it’s maybe “same same but different. So, let’s have a look at what is different. Here are the two biggest changes.
The most significant and the number 1 change is that there is no new UST or similar token. No more algorithmic stablecoin. Anchor Protocol with its 20% yield was at the base of the whole Terra Luna downfall.
There was simply no way they could maintain this yield. This costs Anchor $3.4 billion per year. There were way more lenders compared to borrowers. Therefore, after the crash, we see the first-time borrowers and lenders move closer together.
Although, it’s like mustard after the meal. It doesn’t matter anymore. For whatever it’s worth, the APY is at 16%. However, since the UST de-peg, it’s irrelevant. 4 The current price of USTC is $0.0186. That’s a far cry from $1.
In addition, Anchor has been very quiet on Twitter recently. There is not that much to talk about anymore. One of their last tweets is how to bridge bETH to Ethereum and get just under 4% APR. The times are a-changing, as Bob Dylan already knew back in the 6 tees.
1/ For those who would like to bridge $bETH off of Terra to Ethereum, here’s a 🧵 on how to send your $bETH from Terra to Ethereum & swap it for $stETH, which yields you a staking yield of ~3.8% APR.
— Anchor Protocol (@anchor_protocol) May 20, 2022
Terra’s Second Big Change
On the other hand, there is no reserve wallet anymore. Therefore, this became obsolete when there was no stablecoin to back up. This also makes Terra a fully community-owned chain.
We are at the end of this Terra 2.0 lowdown. Time to wrap it up. You should now have a better idea about what LUNA 2.0 is.
- We asked you some hard questions. About how you feel about the new LUNA 2.0 Let us know in the comment section.
- We discussed the airdrop and also looked at what is different in the new setup.
Also, we don’t give financial advice, you know that by now. But be careful if you plan to invest in any of the LUNA tokens. This dust hasn’t settled yet.
Moreover, for more cryptocurrency news, check out the Altcoin Buzz YouTube channel.
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