Over a week ago, the founder of Terraform Labs revealed there were plans to revive Terra LUNA. This was after the Terra stablecoin, UST, and native cryptocurrency LUNA collapsed at the start of May. After much discussion, the Terra community has passed a plan to revive the ecosystem.
Plans to Revive Terra
According to a tweet from the official Terra account, the plans to create Terra 2.0 have passed. The account stated that proposal 1623 had passed with overwhelming support. This proposal calls for a new blockchain as well as the preservation of the community.
This proposal calls for the creation of a new Layer-1 Terra blockchain that does not have an algorithmic stablecoin. The old blockchain’s name will change to Terra Classic (LUNC), and the new one will be called Terra (LUNA). The Luna token will be new, and will not have any association with the old Luna token, which has the same name.
According to the data posted by Terra Station, 65% of the community, comprising around 200 million votes, voted to go on with the plan. At the same time, 21% abstained, comprising 54 million votes, while 13%, comprising 41 million votes, chose no. Having passed the vote, the plan will roll out starting on May 27.
According to the proposal, the new Luna tokens will be airdropped to anyone still holding their LUNA tokens, or UST stablecoins. Distribution plans are as follows:
- 30% to the community pool.
- 35% to pre-attack LUNA holders.
- 10% to pre-attack UST holders.
- 10% to post-attack LUNA holders.
- 15% to post-attack UST holders.
All wallets tied to Terraform Lab, and those tied to the Luna Foundation Guard will not take part in the airdrop. The reason for this is to ensure Terra is a fully community-driven chain, which will empower the ecosystem.
The Collapse of the Luna Ecosystem
By now, everyone knows what happened to Luna, and the native stablecoin. Problems began after TerraUSD (UST), which is an algorithmic stablecoin, fell to below its $1 peg. A series of events then followed that triggered one of the most fierce bear runs in the history of the crypto markets.
The original LUNA hit a new all-time high of $119 in April before it completely crashed in May, and is now trading at around $0.0001862 per Luna. UST, the stablecoin, saw its price fall from $1 to a current price of $0.0862. The UST coin’s price was algorithmically maintained via a delicate balancing act of various coins such as Bitcoin, Avalanche, and even LUNA. It relied on a system of arbitrageurs who would swap or bun LUNA and UST to keep the price stable. The collapse of UST has riled up government officials in the US, and around the world, who are calling for tougher regulation for the crypto sector.
The launch of LUNA 2.0 will be a test of whether the community is strong enough to keep LUNA going. However, it will have to regain the trust of many who no longer believe in its founders or organization. Besides that, it would have to work to regain the trust of mainstream exchanges, who would have to agree to list it.