In less than a month after the deployment of the new blockchain, LUNA 2.0, the token’s price has declined by over 77%. Early this year, the Terra blockchain was hailed to be the future of cryptocurrencies, as it seemed to promise several developmental advances. Then the protocol encountered a great shocker when its UST stablecoin and LUNA crypto token crashed drastically.
The Terra Blockchain
Launched in 2018 by the Terraform Labs and founded by Co-founders Do Kwon and Daniel Shin, Terra was a cryptocurrency protocol used to provide access to stablecoins.
Recently, Kwon set his official Twitter account private, raising further suspicion that the token price may not be appreciated.
According to market capitalization, the Terra protocol initially rose to become one of the ten leading blockchains in the world. It provided two unique tokens; the TerraUSD UST stablecoin and the LUNA utility coin, used for governance and to facilitate payments in the network.
Since its inception in 2018, the Terra blockchain had been performing very well until mid-May 2022, when the blockchain saw a massive sell-off of the LUNA. The token’s price dropped from around $120 to about $0.02 between 11th and 12th May.
Related Reading | Bullish: Bitcoin Marks First Green Weekly Close After Two Months In The Red
Some people believe that the collapse was due to institutional investors “short-selling” Bitcoin (BTC) for the UST stablecoins in hopes of profiting from yielding in the Anchor project.
LUNA Decline And Introduction Of Terra 2.0 Solution
After the freefall of Terra’s LUNA and UST coins, the blockchain released the LUNA 2.0 via airdrop. The new token promised to enable users to regain their lost funds and replace its predecessor, the LUNA original coin.
According to data from Coingecko, the token has been experiencing a steady decline in price since its inception. As of press time, the token had encountered a 77% decline and is currently trading at $3.50 per coin. It’s also down by 17% from its 24-hour trading value.
Part of this decline attributes to the impact of the broader bearish market affecting all coins in the DeFi ecosystem.
In addition, Do Kwon, CEO of Terraform Labs, faces challenging legal troubles. And the South Korean police warned that he might get jail time for the massive crash of the blockchain. Besides that, the police are also running investigations on one of Terraform Labs’ staff for theft of funds.
Related Reading | A Look Inside MicroStrategy’s $2.4 Billion Loan Used To Buy Bitcoin
FatMan, a pseudonymous self-acclaimed Terra insider, accused Do Kwon, and his corporation. The Terraform Labs are deceptive and lying about their intention for the new LUNA tokens. According to his Tweet, Terraform Labs (TFL) possesses over 42 million LUNA worth more than $200 million.
While they have yet to verify his claims are valid, they have still rallied enough ruckus to affect investors’ sentiments to sell their tokens.
Featured image from Pexels, chart from TradingView.com