EXPLAINED | LUNA 2.0: What Is It? Will It Help Revive Terra?

LUNA’s revival plan will make Terra “more like a DAO,” as per Mudrex CEO Edul Patel.

LUNA prices saw an unprecedented crash due to the de-pegging of UST. ( Image Source :Getty )

New Delhi: Terra (LUNA) cryptocurrency faced an unprecedented crash last week, losing nearly all its value, sending waves of panic among investors. The crash was primarily attributed to the ‘de-pegging’ of TerraUSD (UST) stablecoin. After losing its dollar value, UST price dipped greatly. At the time of writing, UST price stood at $0.08596 whereas LUNA price stood at $0.0001366, as per CoinMarketCap data. The shocking dips have led to investors losing faith in the crypto, with Binance exchange even going to the length of halting LUNA trading. In order to help the Terra ecosystem get back on its feet, founder Do Kwon revealed LUNA 2.0, a revival plan.

LUNA 2.0: What is it?

LUNA 2.0 refers to the LUNA Revival Plan 2, as revealed by Do Kwon in a blog post earlier this week. The plan entails several changes, from a new blockchain to a total token reset.

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Earlier this week, the Life Foundation Guard (LFG) of Terra deployed resources of around $1.5 billion to help stabilise the LUNA price. However, that didn’t go as planned, as can be seen in the latest LUNA figures. Hence, Revival Plan 2 was announced.

LUNA 2.0: What will the new blockchain be called?

As per Do Kwon, the current Terra blockchain will be “forked” into a new one. However, it will lack the UST stablecoin mechanism as before. The older network will now be called Terra Classic (LUNC). The new blockchain, to avoid confusion among future investors, will be called Terra (LUNA).

LUNA 2.0: Will free LUNA tokens be distributed?

Yes, the new LUNA token will be airdropped for those who stake their existing LUNC tokens, residual USTs, and other essential tokens on the LUNC ecosystem.

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LUNA 2.0: Who will get the free LUNA tokens?

The free LUNA tokens will be distributed among the Terra community only. This makes sense since LUNA aims to be a community-owned blockchain. For the community airdrop, Terra FormLab’s wallet address will be whitelisted.

LUNA 2.0: Will there be a token reset?

Yes. The total number of new LUNA tokens will be reset to 1 billion, in terms of active circulation.

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LUNA 2.0: Will there be a new inflation rate?

Do Kwon said in his plan that the current revenue stream would fail to cover the security costs without increasing swap fees. Proposing a target of 7 percent per annum, Kwon asked community members to incentivise Terra’s network security in line with the native token’s inflation.

LUNA 2.0: Will it help revive Terra?

Edul Patel, the CEO and Co-Founder of global crypto exchange Mudrex, LUNA’s revival plan will make “Terra more like a DAO.” For those unaware, a decentralised autonomous organisation (DAO) is a community-driven-and-controlled organisation that is not influenced by a central government.

Patel told ABP Live, “Even though the plans are well in place, gaining support from LUNA holders, this might take some time to come out materialistically.” For now, Patel advises to “wait and see” how the implementation goes through.

Sathvik Vishwanath, CEO and Co-Founder of Unocoin, told ABP LIVE, "One of the main reasons for LUNA to face a terrible fate last week is because, even though they were running the token on Ethereum which is a decentralised network for doing transitions, the governance of it was quite strongly held at the Luna Foundation."

"Now LUNA 2.0 plans to decentralise governance as well (and make it into an entity that is generally called DAO) so that it will be more globally governed instead of just one organisation or foundation," Vishwanath said.