Luna 2.0 will go live on May 27 – the same day as the genesis block for the new Terra chain. At launch, all eyes will be on the Luna 2.0 price. While the new coin will mark a reset for the network, holders and those in the cryptocurrency community won’t forget the collapse of Luna Classic any time soon.
A Quick Roundup
On May 9th, the algorithmic stablecoin built on top of the Terra protocol and a driving force behind its entire ecosystem – UST – lost its peg. A couple of days later, it was already trading at around $0.30 – a whopping 70% below its intended value of $1.
Because of how the algorithm works, this provided for a tremendous arbitrage opportunity where traders were able to redeem 1 UST (trading below $1) for $1 worth of LUNA. This design was intended to destroy the UST and reduce its supply which, in turn, should have increased its value. The selling pressure, however, was tremendous, and UST never came close to its $1 peg.
This allowed traders to print LUNA in excess, creating a massive supply of over 6 trillion LUNA in a couple of days. Needless to say, this kind of supply expansion in this short time frame with no possible way to absorb it led to the inevitable – LUNA’s price crashed to $0.
The entire Terra ecosystem was wiped out and saw billions disappear from the market in less than a week in an event that will forever echo in the chambers of crypto history.
New Terra 2.0 Network
Following the disastrous Terra crash, the new network is launched to revive the project. For this, the old network will be split up, although it should not be seen as a hard fork. It is a completely new network.
To get this network off the ground, and to somewhat compensate LUNA owners, an airdrop is being held. This means that the cryptocurrency of the new network will be distributed to the LUNA owners who have been victims of the crash. But LUNA holders who picked up some dirt-cheap LUNA after the crash also lay claim to the new cryptocurrency, which will also simply be called LUNA. How and what you will read in the next part.
LUNA airdrop, how is it arranged?
As stated in the adopted proposal 1623, the new network will be launched on May 27. At that point, LUNA classic (LUNC), Terra UST classic (USTC) and aUST owners will receive a portion of their new crypto in their wallets. However, how much you get depends on when you owned these cryptocurrencies. There is therefore a “pre-attack” and “post-attack” snapshot taken from the old Terra blockchain.
The pre-attack snapshot is a snapshot of the blockchain on May 7 at block height of 7544910, i.e. before the collapse. The post-attack snapshot will be taken on May 26 at block height of 7790000. And now it might get a little complicated. Depending on these snapshots, how much you get is determined.
How is the LUNA and UST paid out?
Holders who had LUNA and UST (that is, UST deposited in Anchor) before the crash and/or LUNA and UST after the crash are eligible. MC shows in a blog post by means of a table how much everyone gets:
If you had up to 10,000 LUNA in your wallet before the crash, you will receive an airdrop of 30% based on your old balance immediately after the launch of the new network. The remaining 70% will be paid out over a period of 2 years with a cliff of 6 months, which means that the payout will start after 6 months. LUNA balances between 10,000 and 1 million LUNA are paid out after 1 year over a period of 2 years. Balances above 1 million LUNA are paid out after 1 year over a period of 4 years.
How much LUNA will you get?
Now that you know how the new cryptocurrency is being distributed, you are probably wondering how much you are getting at all. In a tweet, Orbital Command let you know how much you will receive approximately per 1 unit of the old cryptocurrencies:
3/10 HOW MUCH NEW LUNA YOU WILL GET FOR EACH CATEGORY:
• PRE-ATTACK LUNA – 1 : ~1.1
• PRE-ATTACK AUST – 1 : 0.033
• POST-ATTACK LUNA – 1 : 0.000015
• POST-ATTACK UST – 1 : 0.013
EG, IF YOU HAVE 1,000 UST ON MAY 27TH YOU WILL GET 0.013 * 1,000 = 13 NEW LUNA.
— ORBITAL COMMAND (🌎,🌔) (@ORBITAL_COMMAND) MAY 24, 2022
No Algorithmic Stablecoins This Time
Arguing that “Terra is not just UST,” protocol founder and CEO – Do Kwon – came up with a revival plan. Without going into the details of how the plan changed over the course of a few weeks, the Terra community and validators voted and accepted the proposition, and the tone was set.The vote for the final proposition ended on May 25th. 65.5% of those who voted approved the proposition, 20.98% abstained from voting, and 13.20% rejected it.Called Terra Ecosystem Revival Plan 2, the plan aims to see the creation of a new Terra chain that won’t have an algorithmic stablecoin. The old chain will be called Terra Classic, and its LUNA will carry the ticker LUNC. The new chain’s token will be called LUNA.
Supported tokens, exchanges, and chains
The below table gives a comprehensive breakdown of what will be included in the LUNA 2.0 airdrop. Investors who held LUNA before the snapshot or hold through the May 26 snapshot will receive airdrops on Binance, Huobi, Bybit, Bitrue, Bitfinex, Kraken, FTX, Gate.io, OKX, and Bitget.Other exchanges may also support the airdrop but are not currently confirmed by Terraform Labs. For example, Swissborg recently notified its users that they are working on distributing the LUNA 2.0 airdrop to users even though it does not list LUNC.Swissborg lists UST as a token and will likely receive a LUNA 2.0 airdrop on behalf of its users. The technical complexity of solving this issue is one facing many exchanges around the world.
LUNA 2.0 Price Predictions
The revival plan including the genesis block of the newly created LUNA 2.0 chain is on the cards. And hence the LUNA price is expected to skyrocket to as high as $50, targeting a market capitalization of $1 billion to $5 billion initially as predicted by an analyst. However, despite a significant upswing, some analysts do not believe in the rally and advice the followers to not buy ‘LUNA’.
The analyst and many people in the crypto-verse believe the LUNA 2.0 may also be a failure and the founder Do-Kwon will dump the traders again. He is still facing huge criticism and disbelief over the upcoming upgrade, as he failed to revive the original tokens. On the other hand, as per some reports, class actions are being prepared against Binance, Coinbase, Kraken & Gemini for the sale of UST & LUNA to US customers.
Collectively, after passing the revival plan by more than 65% votes, it appears that the community may remain skepticism about the performance of the LUNA 2.0. However, the LUNA 1 services would be suspended by May 26, 2022, and the services of LUNA 2.0 would begin on May 27. Therefore, the upcoming weekend may be extremely crucial for the crypto-space as another breakdown may result in another massive crash ahead.