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DeFi and Credit Risk
A new version of the defunct luna cryptocurrency is currently available on major exchanges, and it's had a rocky start.
Supporters of the Terra blockchain project agreed last week to resurrect luna but not terraUSD, a so-called "stablecoin" that fell below its planned peg to the dollar, prompting fear in the crypto market.
TerraUSD, often known as UST, is an algorithmic stablecoin. To keep its $1 worth, it relied on code and a sister token, luna. However, as the value of digital currencies declined, investors fled the stablecoin, sending UST and luna down with it.
The old luna, now known as "luna classic," had a circulating supply of almost $40 billion at its peak.
Luna has a new incarnation now, dubbed Terra 2.0 by investors. It is already available for purchase on exchanges such as Bybit, Kucoin, and Huobi. Binance, the world's largest cryptocurrency exchange, has announced that luna will be listed on Tuesday.
Its debut was a disaster.
According to CoinMarketCap data, luna plunged as low as $4.39 just hours after reaching a high of $19.53 on Saturday. Its price has since stabilized at roughly $5.90.
Analysts are pessimistic about Terra's resurrected blockchain's chances of success. It will have to compete with a slew of other "Layer 1" networks, which provide the infrastructure for cryptocurrencies such as ethereum, solana, and cardano.
Luna tokens are being distributed via a "airdrop" by Terra. In an effort to recompense investors, the majority of the money will go to people who owned luna classic and UST before they collapsed.
Experts argue that many investors who were burned by the catastrophe are reluctant to trust Terra again. The initiative has suffered a "huge loss of credibility," according to Vijay Ayyar, head of international at crypto exchange Luno.
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