The newly-minted version of the collapsed luna cryptocurrency is finally live in the market. But the revival is not heading off to a good start.
(Photo : JUSTIN TALLIS/AFP via Getty Images)
An illustration picture taken in London on May 8, 2022, shows a gold plated souvenir cryptocurrency Tether (USDT) coin arranged beside a screen displaying a trading chart.
A Bad Start
Several supporters of the Terra blockchain project have decided to revive luna but not its TerraUSD, which is called a "stablecoin" that suffered a massive meltdown when it dipped below its intended peg to the dollar.
The meltdown raised concerns about the possible death of crypto and the Decentralized Finance (DeFi) market last week lost $83 billion after the crash.
TerraUSD (UST) is considered an algorithmic stable coin, while relied on code and luna, its sister token, to retain a $1 value. But after the crash, investors quit the stablecoin and the UST and luna fell as well.
But now, luna is trying to bounce back with a new iteration called Terra 2.0. It is currently trading on major exchanges such as Bybit, Huobi, and Kucoin. While Binance, the largest crypto exchange, is yet to list luna on Tuesday.
However, the revival is off to a bad start.
As noted by CNBC, luna reached a peak of $19.53 on Saturday but hours later, it eventually declined to $4.39 based on CoinMarketCap's data. As of now, its value has settled at around $5.90.
Terra is currently distributing luna tokens via a so-called "airdrop." The distribution will reach those who have had a luna classic and UST before the meltdown so that they can compensate for the losses of its investors.
However, several investors were deeply affected by the crash and they are unlikely to try Terra for the second time again, according to expert Vijay Ayyar.
Ayyar, head of international at crypto exchange Luno, said in a statement with CNBC that there has been a "massive loss of confidence" in the crypto project.
Meanwhile, Dogecoin co-creator Billy Markus wrote in a tweet that those who are looking to invest in Terra 2.0 "will show the world just how truly dumb crypto gamblers really are.'
Read Also: CryptoWatch: Bitcoin Dominates, DeFi Market Logs Big Losses, and Terra 2.0 is Launched
Another Problem: South Korea's Probe to Terra's Crash
Terra 2.0 could be subject to further scrutiny after South Korean authorities have initiated a probe into Terra's ecosystem-wide meltdown that happened earlier this month.
According to ZyCrypto's report, Korean prosecutors are investigating allegations of internal price manipulation and other issues. Particularly, the Seoul Southern District Prosecutor's Office has summoned Terraform employees who took part in the early stages of the project back in 2019.
One of the employees allegedly said that the team was concerned about TerraUSD's design from the get-go. They alleged that they have raised cautions to Terraform Labs CEO Do Kwon regarding the algorithmic mechanism of the stablecoin but Kwon proceeded with the launch nonetheless.
The investigators are looking to determine whether Kwon ignored the stablecoin's design flaws before the launch while also looking at alleged price manipulation within the company. Furthermore, authorities will also investigate whether local crypto exchanges have undergone proper listing procedures before the enlistment of the UST and LUNA.
The investigation only came after the launching of Terra's new blockchain to recover from its crash.
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Written by Joaquin Victor Tacla
