LUNA 2.0 was released on May 28th and immediately dropped by 74%. It then fell another 60% but flattened last week as the market struggles to gauge fair value amid controversy surrounding the crash and LUNA 2.0 price guidance for 2022 and beyond.
What is Terra 2.0 (MOON)?
Terra (LUNA) is a public blockchain protocol that grew out of Terra Classic. Terra Classic is home to the TerraClassicUSD (UST) algorithmic stablecoin. The LUNC token has now been renamed to UST, guaranteed by the LUNC token that broke in a bank run in May 2022. This depreciated LUNA almost to zero and led to the launch of a new chain, resulting in Terra Classic and Terra. A full analysis of the Terra crash can be read here.
The development of Terra Classic was started in January 2018, and the blockchain was launched in April 2019. It tried to combine the price stability and widespread adoption of fiat currencies with the censorship resistance of bitcoin (BTC) and offer fast and affordable settlements through its UST stablecoin. . Terra Classic offered stablecoins pegged to the US dollar, South Korean won, Mongolian tugrik and a basket of currencies with special drawing rights from the International Monetary Fund.
The new Terra blockchain continues the Terra Classic legacy without the UST stablecoin. It will continue to be built with the help of the LUNA community, dubbed “LUNAtics”, and will develop the world-class UX and UI that propelled Terra Classic into second place in Total Value Locked (TVL) at its peak. Many DApps have agreed to migrate to Terra in order to continue their functionality.
Terra Luna Project
The Terra project was founded in 2018 by former Apple (AAPL) and Microsoft (MSFT) software engineers Do Kwon, who was previously the founder and CEO of wireless mesh decentralized network startup Anyfi, and Daniel Shin, who was the co-founder of the South Korean electronic mail. trading platform Ticket Monster and startup incubator Fast Track Asia. Ironically, the project was aimed at introducing blockchain technology and cryptocurrencies, with a focus on price stability and user experience.
Terra focused on creating algorithmic stablecoins such as TerraUSD (UST) that maintained their peg to the US dollar through a LUNA token exchange mechanism that allowed users to exchange 1 UST for $1 into LUNA tokens. May 9, collapsed May 12 and triggered hyperinflation as UST sales led to the minting of billions of LUNA tokens.
On May 28, Terra relaunched the LUNA token without UST as a hard fork or by-product of the blockchain. According to the project migration documentation, “the original Terra was renamed to Terra Classic, and a new network was created with the existing name Terra… Terra stablecoins were renamed to Terra Classic stablecoins. TerraUSD (UST) became TerraClassicUSD (USTC) and TerraKRW (KRT) became TerraClassicKRW (KRTC).
Analyst’s view of LUNA 2.0
Anders Helseth senior analyst at market research firm Arcane, noted that Terra’s UST stablecoin “served as ideal exit liquidity in what can be described as an extended pump-and-dump scheme.” “The combination of LUNA’s supply controls, the psychology of the dollar, and the guarantee of high returns guaranteed by its own pre-mined tokens created a steady liquidity outflow,” he said in a note.
Since the Terra protocol did not have a built-in inflation mechanism, early token holders had two ways to make a profit: selling tokens to new token buyers, or holding tokens until they appreciated the theoretical value of the paper. “The lack of block rewards and the highly concentrated supply of LUNA gave all the power to early holders,” Helseth wrote.
“Terraform blockchain data shows that wallets connected to Terraform Labs and large initial LUNA holders were generating huge profits… “The common denominator for all clusters is that one or more wallets in the cluster received significant transfers from Terraform Labs wallets or from the largest wallets John Doe on October 3, 2020 “From October 2020 to May 5, 2022, clusters have a net outflow of $6 billion to exchanges and bridges (flow value calculated using market prices at the time of transfer). In contrast, all the other hundreds of thousands of portfolios have net inflows of $6.5 billion.
“Through the LUNA token pump, the burn/mint mechanism, and the creation of strong demand for the UST token through Anchor, ideal outflow liquidity has been created for the major LUNA exchanges. The UST exit gate was used to scale for a set of very old LUNA holders. At best, profits can be described as spin-offs from a failed bootstrap attempt.” There were allegations that Terra co-founder Do Kwon withdrew $2.7 billion in the months before the UST collapse, which he denied in a Twitter thread.
Cryptocurrency analyst John Hargrave of Quantum Economics noted that there were “yellow flags that should have made people wary of investing in land, and red flags that should hopefully prevent investors from reinvesting in land when it restarts.” The yellow flags included the fact that UST was an algorithmic stablecoin and that the Earth is heavily centered around Do Kwon.
It is alarming that Terra was offering 19.5% APR on the Anchor protocol, paid out of its reserves; and this Anchor held 75% of Terra’s supply – unlike Ethereum, for example, with a rich ecosystem of decentralized applications (dApps). Do Kwon raised more red flags with immediate plans to restart LUNA as a standalone token without a stablecoin and amend the proposal once voting begins. According to Hargrave, the fact that the vote did pass was another wake-up call.
“You have to be a LUNATIC to reinvest. As value investors, ask yourself: where is the value? Does land, technology really benefit the world?” wrote Hargrave. “Creating a new token out of thin air, getting rid of the stablecoin and pretending nothing happened: how does that create value? It’s a cryptocurrency, so anything can happen.”
Mads Eberhardt, a crypto analyst at Dutch bank Saxo, commented after the launch of LUNA 2.0 that Terra is “ignoring what caused the billions to crash.” The collapse of UST wiped out a total market capitalization of $58 billion, of which UST accounted for $18 billion and LUNA for $40 billion. “At some point you have to admit defeat and let the project die. Terra was supposed to be such a project,” the analyst said in a note published on May 30.
“In our view, Terra has already caused enough damage to individuals and the cryptocurrency market as a whole. The people behind Terra seem to believe they can always try again if their first attempt fails, thus neglecting the fact that their flawed design has already led to billions of dollars in ruin. “The Terra case does not represent the cryptocurrency market in a good light, nor does the Terra 2.0 narrative that “let’s just try again.” The crypto market must focus on projects that create value in order to become something more than a speculative asset class.”
LUNA 2.0 Price Forecast
Terra’s price is predicted to peak at $4,613 during 2022. As early as 2023, according to our Cryptocurrency Price Prediction Index, Terra (LUNA) could reach a high of $8,877 with an average trade price of $6,601. According to our Cryptocurrency Price Prediction Index, LUNA is expected to exceed the $10.701 average price level in 2025.
The minimum expected price of Terra at the end of this year should be $9.881. In addition, the maximum price of LUNA can be as high as $10.906. Terra price is predicted to reach the lowest possible level in 2030 17.466 USD at 13.161. According to our Cryptocurrency Price Prediction Index, the price of LUNA could reach its highest possible level of $US XNUMX XNUMX with a projected average price of $ XNUMX XNUMX.
Keep in mind that cryptocurrency markets remain highly volatile, making it difficult to accurately predict the price of a coin hours later and making long-term estimates even more difficult. Thus, analysts and forecasters using algorithms may be wrong in their predictions. Having said that before making any investment do your research, investing in cryptocurrencies is very risky and speculative and this article is not the author’s recommendation for investing in cryptocurrencies.
LUNA 2.0 token
The maximum initial supply of LUNA coins on the new Terra network is 1 billion, of which 124.6 million were in circulation at the time of writing on June 20. “The mint module will issue new coins every block as a staking reward at a standard rate of around 7% [per year],” the documentation says.
LUNA 2.0 tokens have been released to LUNA token holders since May 27th. The new LUNA coin opened at $18.98 on May 28, but immediately fell sharply in price and was at $4.94 by the end of the day. Although the price rebounded to $30 on May 11.97, it fell again and hit an intraday low of $1.96 on June 8. Since then, the coin has been trading around $2.
Where to buy LUNA 2.0?
LUNA 2.0 cryptocurrency can be traded on the following exchanges: Binance, Huobi, Bitrue, Bitfinex, FTX, KuCoin, Gate.io, Bybit, and LBank.
Cryptocurrencies are high risk assets, especially currencies like LUNA which have a history of volatility. Only you can decide if LUNA 2.0 is right for your portfolio, depending on your risk tolerance, portfolio size and objectives. Keep in mind that past performance is not a guarantee of future earnings.
Prediction sites vary in their opinion on the price of the LUNA 2.0 token going forward, with some predicting the price will fall while others predict different levels of returns. This difference in forecasts reflects the importance of doing your own research to get an informed idea of possible future price changes. Please note that predictions based on algorithms and analytics may not be correct.
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