Less than a month after the deployment of the new blockchain, LUNA 2.0, the coin lost more than 77% in price. Earlier this year, the Terra blockchain was touted as the future of cryptocurrencies, as it promised a number of developmental advances. The protocol then suffered a major setback when its UST stablecoin and the LUNA crypto token crashed sharply.
Terra Blockchain
Launched in 2018 by 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 more suspicions that the token may not appreciate in value.
By market capitalization, the Terra Protocol initially became one of the ten leading blockchains in the world. It provided two unique tokens; The TeraUSD UST stablecoin and the Luna utility coin, are used for governance and to facilitate payments across the network.
Since its inception in 2018, the Terra blockchain was performing extremely well until mid-May 2022, when the blockchain saw a massive sale of LUNA. 11. Token price fell from around $120 to around $0.02 betweenth and 12th May.
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Some believe the collapse was caused by institutional investors “short-selling” bitcoin (BTC) for the UST stablecoins, hoping to profit from the Anchor project.
Introducing Luna Reject and Terra 2.0 Solutions
Following the release of Terra’s LUNA and UST coins, the blockchain released LUNA 2.0 via an airdrop. The new token promised to enable users to recover their lost funds and replace its predecessor, the LUNA Basic Coin.
According to data from Coingecko, the coin has been on a steady decline in price since its inception. As of press time, the token was down 77% and is currently trading at $3.50 per coin. This is also 17% lower than the 24-hour trading price.
Part of this decline reflects the effects of a broader bearish market impact affecting all coins in the DeFi ecosystem.
In addition, Terraform Labs CEO Do Kwon faces challenging legal troubles. And South Korean police warned that he could face jail time for the blockchain mass crash. In addition, the police are also investigating one of the employees of Terraform Labs for theft of money.
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Fatman, a pseudonymous himself acclaimed Terra Insider, accused Do Kwon and his corporation. Terraform Labs is fraudulent and lying about their intentions for the new LUNA token. According to his tweet, Terraform Labs (TfL) has over 42 million LUNAs worth over $200 million.
Although they have yet to verify that their claims are valid, they have caused enough ruckus to sway investor sentiment to sell their tokens.
Featured image from Pexels, chart from TradingView.com
