After a harrowing finish to the month of May with Terra/Luna crashing and subsequently causing the entire market to tumble down with it—the market is beginning to stabilize and Terra is making its comeback in a big way. As of the time of writing, Terra’s new coin, Luna 2.0, has had what can only be described as a bumpy ride.
Luna 2.0, right after its listing on major exchanges like Kucoin, Binance, and Coindesk—nosedived nearly 70% — losing all of its major gains in the presale. As of the time of writing, the token that is supposed to revive the former $100 USDT is trading at a measly $5.45. Down from the $17.8 that the tokens were initially issued at and even farther from the $19.53 it had ballooned up to.
As the crypto community decides what to do with the Terra Luna situation, both institutional and retail investors have to ask themselves whether this project is worth saving. And whether or not we can ever fully confide in Terra/Luna as a project, regardless of their now stable coin-less ecosystem.
Luna’s Revival Plan
Like Jesus Christ after the resurrection, so too is Luna back from the dead. And by the initial looks of it, it might just be able to live long enough to get back on its two feet. With the help of Terraform Labs and some prudent decisions on behalf of its CEO and founder, Do Kwon—Terra is back in full swing (kinda).
The embattled former stable coin asked its users what they wanted to do and they ultimately voted on the creation of a new coin, Luna 2.0. The former Luna and Terra coins will also be able to be traded, only under the moniker of Terra Classic and Luna Classic.
What The Critics Are Saying
Despite the billions of dollars lost in the crypto market crash, the thousands of affected investors, and a market that finds itself in low self-esteem—Terra is pushing forward. And this is upsetting other major players in the crypto industry and with good reason.
Matt Hougan, the Chief Investment Officer of crypto management firm Bitwise said that he and his firm have no plans on directing any capital to the renewed Terra Luna ecosystem. In an interview with the Washington Post, Hougan went on to remark,
“We wouldn’t touch Luna 2.0 with a 10-foot pole,”
Hougan later added that he doesn’t believe that algorithmic stablecoins function in a well-regulated economy. And that they are ultimately a house of cards, with situations like the Terra Luna crash serving as prime examples of what can happen where there is no real-world peg to a stable coin.
He ended his opinion on the Terra Luna team by saying,
“The collapse thoroughly damaged confidence in the team. I suspect there’s just no coming back from it.”
Is There A Future With Terra Luna?
Both institutional and retail investors are angry with Terra, with the crash, and with the fact that little is being done to stop this from happening again. Critics of Do Kwon, the founder of the Terra ecosystem, point out how if something similar had occurred on Wall Street, the CEO would not be allowed to create a new system a week after.
Yet not even an entire month after, the founder of this house of cards can launch a new financial product with the same ecosystem. Without any new regulations or frameworks in place, this is a recipe for disaster, says Matt Hougan of Bitwise.
Only time can tell what governments will do in response to the Terra Luna crash and if there are any new guidelines put in place to prevent this from ever happening again.