The recovery plan after the collapse of Terraform Labs’ stablecoin TerraUSD (UST) and its native token Terra (LUNA) began on a rocky path after the LUNA 2.0 cryptocurrency suffered a significant price correction hours after its launch.
By press time, the token value had plunged by over 67%, trading at $5.78 from the launch price of $17.8, according to CoinMarketCap data.
The drop comes after Terraform Labs successfully distributed the LUNA 2.0 tokens to investors who held LUNA Classic (LUNC) and TerraUSD (UST). The token was airdropped on May 28, with a maximum circulating supply capped at one billion.
LUNA 2.0 features
According to Terraform Labs, LUNA 2.0 was released under Phoenix-1, the Terra 2.0 mainnet. In an announcement, the company noted that node services, wallets, and explorers would follow the mainnet to go live later.
Additionally, the LUNA 2.0 token does not share any history with the asset’s first version, and it will be based on a genesis blockchain starting from block 0 with no dApps on launch.
Besides the exchanges, other crypto ecosystems announced a commitment to assist Terra projects to come back to life. For instance, Binance, through the BNB Chain, noted it would provide investment and support to projects considering migrating from the Terra ecosystem.
However, LUNA 2.0’s price correction has not correlated with interest in the token before the launch. As per Finbold’s report, the interest in the keyword ‘LUNA 2.0’ on Google Search surged from a popularity score of 8 in the week starting on May 1 to 100 on May 15.
The decision to launch LUNA 2.0 was officially reached on May 25 after the conclusion of a voting exercise by community members. The new token was launched as part of Terra founder Do Kwon’s revival plan after investors lost significant money in the coins.
Kwon accused of fraud
Kwon has been the main focus of the crash, with a section of the crypto community blaming him for the collapse. Besides the Terra controversy, Kwon also faces accusations of fraud over the Mirror Protocol.
Following the coppase, the LUNA continued to make losses, with the market capitalization dropping below the $1 billion mark. Interestingly, the crash had generated hype around LUNA, with Google search popularity scores soaring higher.
Interest in the collapsed token was fuelled by a short-term spike as optimistic investors pumped more money. According to market analysts, interest in the token was due to the hope that it would mirror meme coins like Dogecoin.
Worth noting is that since the collapse, several crypto analytics firms have attempted to determine what went wrong with the network. As reported by Finbold, Nansen’s research team revealed the network collapse was due to an attack by a single individual.