All You Need To Know About Luna Crash And Luna 2.0
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Terra Cryptocurrency (LUNA) was formerly one of the top ten decentralised finance cryptocurrencies, but in recent days it has lost nearly all of its value. The Luna Terra Coin is no longer being traded on Indian crypto platforms.
The Terra cryptocurrency saw an unparalleled meltdown, generating waves of panic among investors. The primary cause of the crash was the ‘de-pegging’ of the TerraUSD (UST) stablecoin. The UST price plummeted after losing its dollar value.
According to CoinMarketCap data, the UST price was $0.08596, while the LUNA price was $0.0001366, at the time of writing. The dramatic drops have caused investors to lose faith in cryptocurrency, with Binance even going so far as to suspend LUNA trade. To assist the Terra environment in regaining its footing, founder Do Kwon revealed LUNA 2.0, a revitalization concept.
Do Kwon has put in place a Luna recovery strategy as the cryptocurrency recovers from the huge Luna Terra Coin meltdown. The present Terra blockchain will be split apart by a Luna fork under this strategy.
LUNA 2.0: What is it?
Luna 2.0 will be the fresh new Terra blockchain revival plan designed to save the Terra Luna ecosystem following the collapse of the stablecoin.
TerraForm Labs CEO Do Kwon’s idea of Luna’s rebirth will see a new chain replace the present Terra network. Luna 2.0 will also replace the current version of Luna. It will cut links with the UST stablecoin that caused the crash in the first place.
Luna 2.0 is divided into several parts:
- New Blockchain
The present Terra Blockchain will be split into a new Blockchain but without the UST algorithmic Stablecoin UST process. The old Blockchain will be known as Terra Classic (LUNC), and the new Blockchain will be known as Terra (LUNA) without this UST arrangement.
- Distribution Mechanism
The new token LUNA will be airdropped (i.e., given away for free) to all individuals who stake, i.e., lock up or pledge their LUNA classic tokens, residual USTs, and other Terra Classic ecosystem necessary tokens.
- Community-Based Crypto
Terra FormLab’s wallet address will be whitelisted for this LUNA airdrop, so only the community will receive it. Terra’s ultimate goal is to establish a community-owned Blockchain.
- Token Reset
The restoration plan included a provision stating that the total number of new LUNA tokens in active circulation would be reset to one billion.
- New Inflation Rate
Do Kwon states in the resuscitation plan that present revenue streams will not be sufficient to meet the cost of security without boosting swap fees. As a result, he asked members of the community to incentivize network security in line with the inflation rate of the native cryptocurrency, which should be set at 7% per year.
Can This Work?
Terra’s Life Foundation Guard (LFG) had to deploy $1.5 billion in resources to stabilise the price of its tokens.
But that plan failed; therefore, this new revival strategy is being implemented. Terra will now be a community-owned crypto Blockchain, similar to a decentralised autonomous organisation, under this revised strategy (DAO). However, there are some significant dangers to be aware of, as most of these steps will take some time to implement.
What’s The Update?
- Crypto Exchanges
Owing to a huge volume of outstanding withdrawal transactions and the underlying LUNA blockchain becoming delayed due to significant network congestion, the world’s largest crypto exchange- Binance ceased trading and withdrew services for LUNA and UST.
- Indian Crypto Exchange
WazirX announced in a user notification that it will begin the process of delisting the LUNA/USDT, LUNA/INR, and LUNA/WRX trading pairs. They will offer Binance free transfer to withdraw their LUNA funds for user convenience. According to a Livemint report, several cryptocurrency exchanges such as CoinDCX, BuyUcoin, and Unocoin have all stated that they will delist LUNA trading pairs.
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