Evaluating the debut of the new LUNA
So, a new chapter in the history of the Terra project is officially open. The stock phrase about the “long-awaited launch” for Terra 2.0 is clearly not suitable: the restart took place even before all the hype around the collapse.
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Also, a big question is how fundamentally all the mistakes were analyzed. The stablecoin Terra USD (UST) was predictably mentioned as the cause of the disaster – it launched the domino effect. At first, it didn’t keep the peg to the dollar and then provoked an avalanche process of burning the provident fund and LUNA hyperinflation. Therefore, UST was simply deleted from the new ecosystem.
The voting among the community showed that 65% of users support a fork of the original network, although the official Terra account emphasized that this was a launch of a new network and not a fork of the old one.
After a minor rebranding (the “Terra” network became “Terra Classic” and the LUNA token, respectively, LUNA Classic, or LUNC), Terraform Labs offered LUNA/UST holders to receive new tokens by simple airdrop.
It must be said that this airdrop is an apparent “bomb” and not of too delayed action. Obviously, many people would try to make at least some profit from “free” tokens, which would inevitably create pressure on the price. Further practice has shown that this is precisely what happened.
But the project had no choice: after such a failure, they were looking for options to somehow compensate for investors’ losses and try to regain the trust. The team was fortunate that several popular CEXs publicly supported them, and on May 28, the Terra 2.0 network began forming new blocks.
As you can see, both the first airdrop and the subsequent listing on the largest exchanges were accompanied by the characteristic behavior of investors: they got rid of their coins at price peaks, which led to corrections of more than 70%. This is unbelief. It is sad to look at those who were at TOP-10 of the world capitalization rating this spring, with memorable “LUNA” tattoos on the forearms of wealthy holders.
The restart looks too hasty. It somehow reminds boxers who lost to an underdog and try to rematch as soon as possible. But without reconsidering the reasons which led to the defeat, the result of a rematch often turns out to be the same.
The project has lost its main profit-generating components: the algorithmic stablecoin, ecosystem liquidity aggregators, and the reputation of its charismatic leaders. Another strength of Terra has always been the community. This ingredient for success is still here. But the near future will show for how long the community will be able to maintain loyalty amidst such significant financial losses.
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