In less than a month after the deployment of the new blockchain, LUNA 2.0, the token’s price has declined by over 77%. Terra, a blockchain that promises many development advancements, was touted as the future for cryptocurrency early this year. The protocol was then hit with a major shock when both its UST stablecoin (and LUNA crypto token) crashed dramatically.
Terra Blockchain
Terra was created in 2018 and launched by Terraform Labs. Co-founders Do Kwon Shin and Daniel Shin founded it. Terra is a cryptocurrency protocol which provides stablecoin access.
Kwon has recently set his official Twitter accountThe private price raises suspicion that it may not have been appreciated.
Market capitalization shows that the Terra protocol was one of the first ten most popular blockchains. The Terra protocol provided two tokens: the TerraUSD UST stabilcoin, and the LUNA utility currency. These were used for governance purposes and to facilitate payments within the network.
Terra’s blockchain has been doing well since its creation in 2018 and was able to perform very well through mid-May 2022. This is when the LUNA saw a major selloff. The token’s price dropped from around $120 to about $0.02 between 11Th12Th May.
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Some people believe that the collapse was due to institutional investors “short-selling” Bitcoin (BTC) for the UST stablecoins in hopes of profiting from yielding in the Anchor project.
LUNA Decline and Introduction of Terra 2.0 Solution
After the freefall of Terra’s LUNA and UST coins, the blockchain released the LUNA 2.0 via airdrop. This token was promised that it would allow users to regain funds lost and to replace the LUNA initial coin.
Coingecko data shows that the price of the token has fallen steadily since inception. The token was currently at $3.50 per currency as of press time. It’s also down by 17% from its 24-hour trading value.
This decline can be attributed in part to the wider bearish market that affects all coins within the DeFi ecosystem.
Do Kwon is also facing legal problems as Terraform Labs CEO. And the South Korean police warned that he might get jail time for the massive crash of the blockchain. Besides that, the police are also running investigations on one of Terraform Labs’ staff for theft of funds.
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FatMan, an anonymous Terra insider who calls himself FatMan, has accused Do Kwon and his company. Terraform Labs is lying and deceitful about the intention to acquire new LUNA tokens. He tweeted that Terraform Labs, (TFL), had more than 42 million LUNA and a value of over $200 million.
While they have yet to verify his claims are valid, they have still rallied enough ruckus to affect investors’ sentiments to sell their tokens.
Featured Image from Pexels. Chart by TradingView.com