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- The 'Rebirth' of Terra 2.0 is underway. Could this be the token's turnaround?
The 'Rebirth' of Terra 2.0 is underway. Could this be the token's turnaround?
Terra 2.0 is officially underway. With the creation of their new blockchain & airdrop to bring back confidence and belief in their project, here’s everything LUNA holders need to know right now!
Over the last few weeks, the whole crypto space was shaken up by the implosion of the Terra and UST collapse. Many HODL’ers lost great amounts of their investment portfolios holding onto LUNA when the algorithmic stablecoin UST lost its peg! This sudden collapse of the Terra ecosystem left many investors with nothing as LUNA sunk to almost $0.
Now the Terra community have voted on a proposal for a solution, including a new blockchain and an airdrop. Easy right? Continue reading for more information 👇
A Reminder Of What Happened
Only just a few weeks ago, we saw the Terra (LUNA) price plummet down to the depths of unimaginable prices. It’s all time high (ALH) was only at the start of April this year hitting $116 to then crashing down to its current price today of $0.00015. It all started when TerraUSD, the stablecoin. A stablecoin is a digital asset that has a valuation of $1 and is pegged to or backed by another currency; some examples include Tether (USDT) and USD Coin (USDC). Some stablecoins are backed by other cryptocurrencies, causing them to be slightly more vulnerable to volatility: for example Terra USD!
TerraUSD (UST) was backed by its sister coin LUNA and only just a few weeks ago, UST lost almost all its value and took down LUNA with it. As prices fell, of course, so did the confidence of investors and they began to panic and sell, resulting in a further drop to its price. So to counter this, LUNA had to flood the market with new coins to try to maintain that ratio of $1 worth of UST used to mint $1 worth of LUNA. This in turn caused massive inflation as so many LUNA coins entered the market. It was like watching a disaster movie and in the final moments, LUNA lost 99.8% of its value….in just a WEEK! 😱
What's next for Terra?
Now in the aftermath of one of the biggest crashes in the history of crypto, Do Kwon (co-founder and CEO of Terraform Labs) and his team finally came up with their revival plan earlier this month. As per their announcement, they will form a completely new chain called Terra 2.0 and it will be launched on Friday 27th May with its native token still being called LUNA but this time leaving out the unusable, unstable, stablecoin UST. What ONCE was called ‘Terra’, will now become ‘Terra Classic’.
Terra states: “The Terra ecosystem voted to pass Proposal 1623 calling for the creation of a new blockchain.” As per the proposed plan, the current original chain will be split off and called ‘Terra Classic’ while the new chain will get the name ‘Terra’ and will run WITHOUT any algorithmic stablecoin. The old Luna token will be called Luna Classic (LUNC) while the new token gets the name LUNA.
(If you’re wondering what all this lingo refers to, Terra 2.0 (the new chain) could either be a hard fork from Terra Classic or a new blockchain network altogether. A hard fork basically means that it would share history with the original chain, but a new chain does not. The team is making it clear that Terra 2.0 will NOT share history with Terra Classic. It will also not replace it, but run parallel).
Do Kwan and his team have decided that all holders of the earlier LUNA and UST cryptocurrencies shall get given via airdrop, the new crypto today (Thursday 26th May). To decide how many of these new tokens will be airdropped, they will rely on ‘snapshots’ taken from the old Terra network to verify the participants.
Something to note however; Terra has mentioned that due to technical constraints, it won't be possible to include all LUNA and UST holdings on Terra in the snapshot. This includes UST or LUNA bridged off of Terra.
The Bottom Line
Terra’s collapse has unfortunately caused a lot of pain to many many people in the cryptocurrency space and there is a possibility that most of them will not have an incentive to ever think of the coin, let alone buy it again!
On the other side, Do Kwon is trying to put Terra’s $40 billion loss for investors in the rearview mirror, but there still may be consequences for the incident further on down the road. Now with all that said and done, will Terra 2.0 address the gaps that existed in the previous version? In fact, more importantly: can they maintain and improve the confidence of their project? Will LUNA in fact be ‘Reborn’? There is not much else we can do right now but wait and see.
For further information and a more detailed understanding of the snapshots and airdrops by Terra, please visit Terra’s own Medium article here.
• At the start of May, Terra (LUNA) token lost 99.8% of its value trying to stabilize TerraUSD - its sister (un)stable coin. • Shortly, Terra will launch ‘Terra 2.0’ in an attempt to start a new blockchain; but parallel to the original which will now be called ‘Terra Classic’. • Terra will be air-dropping new tokens to current LUNA holders - but is this a new lifeline for Terra or should investors have a reason to be weary?
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