Terra Luna 2.0 off to a rocky start
A couple of weeks after Terra’s ecosystem restarted with a LUNA 2.0 airdrop, the coin has seen its value plunge to new lows. The coin is currently trading at around $3 marking a drop of over 70% from its all-time high according to Coin Market Cap data.
Although the overall performance of the crypto market has played a role in the decline, the level of FUD surrounding the new coin is also a major factor.
Speculations about Do Kwon’s role in making the new Terra network have emerged dampening trust in the new ecosystem.
This came after self-proclaimed Terra insider FatMan alleged via Twitter that Do Kwon and Terraform Labs lied about making the new network community-owned. In his tweet, he made claims that “TFL owns 42M LUNA, worth over $200m.”
Indeed, results aren’t living up to expectations for a quick recovery as hoped for by most investors who received new Luna tokens following last month’s collapse of the cryptocurrencies tied to the failed Terra blockchain.
Just a day before the TerraUSD (UST) stablecoin began to lose its 1-to-1 peg to the dollar on May 7, its affiliated token Luna was trading at about $86.
Around $40 billion in market value was erased for holders of UST and Luna – whose devotion to the project earned them the nickname Lunatics – when the stablecoin de-pegged prior to the catastrophic crash. The crash didn’t prevent advocates of Luna 2.0 from hyping the token with predictions that it will soon head back “to the moon”. As things stand, things don’t look good for the new project.
Also read: Binance CEO: Terra (LUNA) Should Have Handled Things Differently
While there is not a widely recognized data point to calculate Luna 2.0’s market value, a rough estimate by CoinMarketCap puts Luna’s total value at about $1.37 billion. That is based on 210 million new Luna tokens in circulation, according to figures from those behind the Terra project. Before the crash, Luna had a market value of roughly $27.8 billion.
The growth of Terra had exploded over the past two years, with investors enticed by the 20% interest rate offered by its quasi-bank app Anchor.
The blockchain, however, wound down in a few days, as a chain of events triggered the project’s collapse with the team fighting a losing battle in trying to salvage the project mainly due to a long-existing flaw of the project, that sent prices of UST and Luna to virtually zero.
The new Terra blockchain, which went live about a week ago, was part of a plan in a community-approved proposal by Terra’s main backer Do Kwon.
The original Terra blockchain was abandoned and is now known now as Terra Classic. The new Terra blockchain has no stable coins. Fifty-eight projects have gone live on the blockchain so far, according to Terra.
According to analysts, the airdrop was poorly structured, rewarding equity holders – LUNA holders over savers or bondholders or UST holders.
While developers seem to be warming up to the new project, rumors of Do Kwon and his team lying about project details and taking his Twitter account private do not exactly spell good news for the troubled project. The next few months and a change in market conditions will surely tell us much more about the project’s future.
