A new version of the cryptocurrency Luna is already available on major exchanges and it began to fall. Last week, supporters of the blockchain project Terra voted for the revival of Luna, but not on terraUSD, the so-called “stablecoin”, which fell below the peg to the US dollar. That caused panic in the cryptocurrency market.
TerraUSD or UST is what is known as an algorithmic stablecoin. It relied on code and a child token, Luna, to support the $1 value. But when digital currency prices fell, investors fled the stablecoin, causing the UST to fall and at the same time undermining Luna.
Twitter users are already joking about the relaunch of Luna, mentioning South Korean entrepreneur Kwon Do-hyung, better known as Do Kwon, who is the co-founder and CEO of Singapore-based Terraform Labs, which launched TerraUSD and Luna, and now a new version.
In its heyday, the old Luna, now known as the Luna Classic, had more than $40 billion in turnover. Now Luna has a new iteration, which investors call Terra 2.0. It is already traded on exchanges including Bybit, Kucoin and Huobi. Binance, the world’s largest cryptocurrency exchange, says it will also host Luna on Tuesday. However, its launch did not go smoothly.
After reaching a peak of $19.53 on Saturday, according to CoinMarketCap, a few hours later Luna fell to $4.39. Since then, it has rolled back to a price of about $5.90.
Analysts are deeply skeptical about the chances of success of the revived blockchain Terra. It will have to compete with many other so-called Layer 1 networks, the infrastructure that underpins cryptocurrencies such as Ethereum, Solana, and Cardano.
Terra distributes Luna tokens through what is called “airdrop”. Most will go to those who kept Luna Classic and UST before their collapse to compensate for the losses of investors.
But many disaster-stricken investors with the previous version of Luna are unlikely to trust Terra for the second time, experts say. Vijay Ayyar, head of Luno’s international cryptocurrency exchange, said the project was a “big loss of confidence”.