On May 9, 2022 the Terraform Labs’ LUNA digital ecosystem started its downward spiral when its algorithmic stablecoin UST depegged and fell to a low of around $.35 in the same day.
The UST stablecoin, tied to the LUNA cryptocurrency coin through an intricately designed protocol which involves the burning of LUNA coins amongst other functions implemented to maintain the 1 to 1 peg with the US Dollar, fell further and harder on days following the initial crash. UST price eventually fell below $0.00, before recovering to as much as a post-crash high of $0.08 on June 29. That wasn’t it though, as the LUNA cryptocurrency, tied to its ecosystem partner UST, also crashed as a result.
Immediate Effects Of The TerraLuna Ecosystem Crash
For several days following the crash, Terra Labs under the leadership of co-founder and CEO Do Kwon, remained at the top of crypto and greater financial market news headlines. It was estimated that as much as $60 billion in USD was wiped out in total, from the crash and events surrounding it. Based on alternative research done by other data experts, the total value of USD lost in the crash and events was at least $40 billion.
Whatever the exact total valuation of losses amounts to, it is agreed by all experts who have followed the crash closely, that several tens of billions of dollars were lost in an extraordinarily short amount of time. But what transpired after the crash was just as, if not more important, for LUNA holders and the larger cryptocurrency world which followed the events closely.
The TerraLuna Ecosystem Responds
With TerraLuna being a decentralized ecosystem and DAO, which places significant value on the collective and individual voices and concerns of its holder community, the team took to constructing a plan in order to present it to the “TERRALunatic” community for a vote in order to proceed with a plan to recover the network in the best way possible.
Controversy followed Do Kwon, who was scrutinized for extracting large sums of capital for his personal salary for months leading up to the crash, and for taking actions like selling TerraLuna’s BTC reserves after the crash, actions the CEO claims were done in order to save the network.
The Plan Of Action Presented By Do Kwon And Revival Plan 2.0
Following the crash Kwon Do-Hyung (Do Kwon’s real name), was able to derive a ‘Revival Plan 2.0’ for LUNA which was first expressed to the LUNA holder community in a Tweet, that would ultimately be accepted and passed by a majority vote. The plan involved the future deployment of Luna 2.0, onto a new PoS blockchain, which would serve as a fork from the original blockchain. LUNA 2.0 was decided upon and the new blockchain was deployed on May 28th.
The original LUNA cryptocurrency was altered to LUNA Classic, and UST was completely disassociated from the new generation blockchain. Original LUNA and UST holders were also written into the plan for LUNA 2.0, as airdrops were scheduled as part of the allocation of the 1,000,000,000 total maximum supply. To date, TerraLuna has confirmed that there are still some holders who have yet to receive airdrops due them. Such airdrops are believed to be the reason for the initial dramatic drop in LUNA 2.0 value following its launch.
What Does The Future Of The TerraLuna Ecosystem Consist Of?
At the time of writing LUNA 2.0 price is down about 90% from its all-time high of $19.53, recorded on launch day. The original network coin, LUNA Classic, currently trades above the price of the newer LUNA V2. Despite the difficulties faced, TerraLuna has been able to maintain the confidence of a portion of its community of holders, while also adding new adopters to its ranks.
It has been disclosed that eventually all of the DApps (Decentralized Applications) which were running on the original TerraLuna blockchain, along with validator nodes and all other network elements, will be migrated to the V2 blockchain. Terra Labs, and co-founder Do Kwon have been vocal in its plans and expectations to bring a new generation of DApps and a revitalized pool of talented developers to build out applications that each says will add value to the decentralized network and its associated LUNA V2 cryptocurrency.
