Post Terra Fallout: Terra’s Forked LUNA Token Trading Deep In The Red

Terra 2.0, Terraform Labs’ second iteration of the blockchain, went live on Saturday following a week-long proposal vote that ended with a 65% majority vote. Terra initiated an airdrop of the new LUNA token to holders of Terra’s previous crypto assets LUNA Classic (LUNC) and Terra Classic USD (USTC).

This was guided by snapshot balances defined by the pre-attack snapshot taken on the Terra Classic blockchain at block height 7544910 on May 07 at 23:00 UTC+08:00 and a post-attack snapshot captured on May 27 04:00 UTC+08:00.

As expected, the new Terra chain imposed a vesting period on a good chunk of the tokens. 70% of the tokens are set for gradual release over a two-year vesting period. The tokens scheduled to serve vesting will start issuance six months into the launch of Terra 2.0. A quarter of all tokens would be available at that time, while the rest would gradually become available over the remaining one and a half years.

Crypto exchanges supported the revamp

The reborn Terra network saw support from major crypto exchanges in terms of listing the new LUNA token and facilitating the settlement process for users affected by the UST de-peg on their specific platforms. HTX, Binance, OKX, FTX, Bitfinex, Bybit, Gate.io, Bitrue, and KuCoin all pledged to list pairs of LUNA for the new network and allow trading.

A new course for LUNA

LUNA 2.0, however, hasn’t fared well – certainly, not to the expectations of Terra founder Do Kwon. Market data shows that shortly after the forked LUNA token made its debut, it reached a peak price of $19.54 before seeing a steep price decline.

LUNA/USD trading chart thus far

The new LUNA token was last spotted changing hands at $6.08 at the time of writing – less than a third of the price figure shortly after being listed on major crypto exchanges. The trading volume during this period has charted a similar path, dropping more than half its peak of $394.50 million. The 24-hr. trading volume sits at $129 million – down approximately 66% in the past 24 hours as per CoinMarketCap data.

Terra votes to support UST burn

While the focus has been majorly on the relaunch of Terra, the old network (now Terra Classic) has been left markedly with the algorithmic UST stablecoin. In attempts to bring value back to UST, Terra recently passed a governance proposal to burn 1.4 billion UST, with the burn estimated to cut 11% of the supply.

The proposal saw overwhelming support, with 99.3% of the total participation voting in favor of the burn. The tokens scheduled for the burn were planned to take two paths. First, 1 billion UST would be sent to the Community Core burn module on Terra’s pool, and then 371 million UST would be bridged back to Terra from the Ethereum blockchain, after which Terraform Labs will implement a burn.

The intent is to reduce the peg pressure on UST by hastening the currently slow process of token burning.

A big gamble or not? The question of how far Terra 2.0 will go

The decision to fork Terra wasn’t backed by all community members. Naysayers have criticized the move, a few going as far as publicly denouncing Terra 2.0.

Dogecoin co-founder, who has never been really hyped by Terra or rather Do Kwon, has queried the approval to launch Luna 2.0, terming users who are possibly looking to onboard the new network as the perfect show of “how truly dumb crypto gamblers really are.”

Markus has openly dueled Do Kwon in the past and accused him of only creating designs structured to fit into his bubble.

Billionaire crypto investor Mark Cuban is another notable figure to distance himself from Terra 2.0.

The Shark Tank host is skeptical of the relaunched network, recently telling Fortune that he isn’t putting his money into the project. Cuban also set forth that he’s never invested in UST or LUNA from the now Terra Classic chain, even dismissing the underlying network’s leading staking platform – Anchor Protocol. The TV personality claimed that he has in the past turned down a chance to invest in the Protocol.

His argument?

“Crypto is like investing in any other business. You look to see if it’s a sustainable product or service.”