What Happened after Terra 2.0 Relaunch

2022-06-17, 02:44

A few weeks after the May 7 depegging that eventually brought Terra to its knees, Terraform Labs' new blockchain Terra 2.0 is up and running.

The basis of this revival plan proposal 1623 was the genesis of a new blockchain entirely separate from the old. The suggestion passed through a governance vote within the Terra community and emerged successful, with 65.5% of participants in support. This amounts to over 200 million individuals who believed "Rebirth of Terra", as the proposal is known, was the way to go.

Proposal 1,623 meant Terra would leave behind its algorithmic stablecoin TerraUSD (UST) in the ruins of its old chain. They would rename that chain Terra Classic and its native token LUNA classic (LUNC). The network would also go for a more decentralized approach in running the new Terra and also focus on hosting more DeFi apps.

A few days after the Terra 2.0 testnet started operation, TFL took an enormous step away from the recent historic crash that shook the entire crypto industry. On Saturday, May 28, Terra announced in a tweet that they had produced the first block of the newly reborn Terra.

Source: Twitter@terra_money

While many showed support ahead of the relaunch, several individuals criticized CEO Do-Kwon's refusal to quit. Now that Terraform has gone through with this significant move let's see how things are faring for the new blockchain and new LUNA investors.
Keywords: Terra, Luna, Terraform

Terra Relaunch Details

Terra 2.0, which TFL has assigned a chain id of Phoenix-1, went live last weekend. The network was deployed with 210 million LUNA tokens in circulation and designed to have a maximum supply of 1 billion tokens. On the same day as the launch, Terra moved forward with the airdrop it had shared details of earlier.

Part of proposal 1623 was reimbursing LUNC and UST holders for losses during the network collapse. Amendments to the revival plan saw TFL clearly define the categories of eligible holders based on specific pre and post-attack snapshots of Terra Classic, block 7544910 and 7790000, respectively. The Terra team was careful to exclude the parent company from the airdrop and outlined the distribution details as such:

30% to the community pool (to fund the network's development)
35% of pre-attack LUNC holders
10% to post-attack UST holders
10% to pre-attack LUNC holders
15% to post-attack UST holders

Terra's renewed focus on community ownership meant most of the issued tokens would be going towards the investors who had lost their funds in the crash. Unfortunately, TFL could not get to all of these individuals as LUNC bridged to other chains could not be considered in the airdrop.

Exchanges Show Support For LUNA Airdrop

As TFL went through with the Terra 2.0 launch, it also moved forward with the airdrop. The network began sending out the news tokens to investors who already owned the LUNA classic (LUNC). Several exchanges had pledged their support before the chain went live, and as the airdrop commenced, they helped facilitate the process.

The exchange delayed its deployment of the LUNA token; however, quite a few platforms opted to list it at release including Gate.io.

Do-Kwon explained the numerous applications of new LUNA in a tweet; the use cases include a staking option on the Terra Station to the investors, favoured validator (s) allowing them to earn rewards and take part in network governance. LUNA users could trade their tokens or utilize them on dApps built on Phoenix-1. The TFL CEO also shared that customers should be able to see their token balances and the new LUNA they now hold.

LUNA Dips Shortly After Launch

The hours after Terra 2.0 went live and new LUNA entered circulation were dark ones for Terraform Labs. The altcoin started at around $17.8 on most exchanges and later experienced an upsurge that drove it to just 5 cents short of $20.

However, it lost over 80% of its value as the day progressed. The new LUNA token dipped to $4.19 and spent the remainder of the weekend moving between $5 and $7. The crash resulted from a sell-off amongst investors who were dissatisfied with the airdrop distribution. Still mistrustful of the token, they were dumping their holdings into the market as soon as they received it.

Some believe these individuals were trying to regain some of their lost funds after Terra's earlier crash. The newer elicited a variety of responses. Despite the negative price activity, pro-Terra sentiment across social media remained strong.

The loss of value was a red flag for Terraform, but challenges were to be expected especially considering the crypto market's current bearish run. Some condemned the relaunch, saying it would ultimately prolong the inevitable. Others poked fun at it and asked investors to anticipate a Terra 3.0 release.

Even Dogecoin Founder Billy Markus was critical, saying LUNA 2.0 investors would be an example to the world of "just how truly dumb crypto gamblers really are."

Terra Briefly Rebounds

In what is, to some, not a very surprising turn of events, the new LUNA token started the new week with an impressive rally. The token saw its value rise steadily as the weekend drew to an end; it rose by 53% to cross the $10 level and hit $11.33 this Monday. Binance distributed its first batch of tokens to airdrop-eligible holders, thus pushing the upsurge.

Source; CoinGecko

At writing time, CoinGecko charts show that the token is resting at $7.05. LUNA has fallen steadily since its $11 high but has not returned to levels as low as this weekend. This has led some to believe there is hope for the Terra network.

It is worthy of note that Binance Founder Changpeng Zhao (CZ) was a huge critic of the network following the crash. In a release from roughly two weeks ago, CZ describes Terra's arbitrage mechanism and post-collapse mitigation measures as stupid. Regardless, Binance remains a faithful supporter of the Terraform as it forges on.

Do-Kwon, true to fashion, remains confident in a successful revival of the network. Terra's official page reminded developers that the relaunch would require them to migrate to the new chain.

Scammers Take Advantage of the Terra Relaunch and Airdrop

According to a report to blockchain security firm PeckShield, they had spotted a LUNA rug pull that saw the ba actors make off with nearly 730 BNB coins with Tornado Cash. The rebirth of Terra has reportedly spawned an influx of scammers looking to capitalize on Terra's revival plans and investor eagerness to recoup their losses.

Source; Twitter@PeckShieldAlert

PeckShield revealed that various fraudulent accounts have shown up on Twitter to post false content related to UST and LUNA. The security company unveiled the wallet addresses of bad actors and Terra related fraudsters. Some of these persons developed phony new LUNA tokens to deceive investors into believing TFL distributed them.

With events like this to consider, Terra 2.0's success is understandably still under question. The blockchain network has taken a significant step forward, and with support from various entities, its prospects look good. While it's a stretch to say Terra will make a full recovery, the network has a long way to go if it hopes to draw close to past highs.

Do-Kwon is still caught up in the makings of a significant legal tussle as prosecutors investigate the entire TFL staff. The goal is to determine if the team was aware of the system's flaws and could have averted last month's disaster.

Author: Gate.io Observer: M. Olatunji
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