The featured image! That image above exactly describes my sentiments for the LUNA revival plans. I think there is a reason they call themselves ‘LUNAtics.’ At least there’s one thing they are living up to their name!
But let us not give it away right in the beginning. Today I plan to share my thoughts on the revival plan: a few reasons why it could work and a few reasons why it would fail. Let us go!
Why Terra 2.0?
A quick rewind for someone who is going through all this for the first time. Around 10th May, the Terra ecosystem collapsed. Yes. From an ATH of $120, LUNA went to a fraction of cents in a matter of a couple of days. Around $50bn worth of wealth was destroyed.
Soon enough, a few videos of Do Kwon, founder of Terra Ecosystem, surfaced. And just like that, everyone started talking about his high-headedness. Something that they might have admired until a few days ago.
And even before the dust could settle around this disastrous moment (because Terra fam also sold BTC worth $1.5bn to save themselves), Do Kwon was ready with yet another revival plan.
Now my first impression when I saw this was ignorant, for I thought that this was a futile attempt to save his face in the web3 realm. Even CZ voiced his opinion about how Terra 2.0 isn’t going to work.
But to my surprise, 65% of the people voted ‘Yes’ for his revival plans. Say what?
What is Terra 2.0?
I would quickly summarize a few main points of Terra 2.0 for a quick context:
- The biggest news of the Terra 2.0 ecosystem is that they are abandoning the UST-Luna thing altogether. This means that Terra 2.0 will not have any form of algorithmic stablecoin.
- Another fact is that pre-crash LUNA will be called LUNA Classic (LUNC), and a new blockchain will be set up with an asset called (Drumrolls), LUNA.
- Luna will be airdropped across its Luna Classic stakers, Luna Classic holders, residual UST holders, and essential app developers of Terra Classic.
Why could LUNA fail again?
I ran a poll on LinkedIn a few days ago to ask my connections if Terra 2.0 would work, and about 65% of them resonated with this side of the equation. Here are a few reasons why terra might not become what it envisions:
I am not even sure what kind of people voted for Terra’s revival. For someone who lost a significant chunk of their savings would start doubting legit protocols out there. Leave aside Anchor; they would now think twice before entering something like Uniswap.
So, in my opinion, trust issues are likely to haunt this new blockchain for a while.
CZ tweeted about this. The fork of a Blockchain does not inherit the value from the original blockchain. Bitcoin SV, Bitcoin Cash would have been as popular as BTC itself if this were the case. Therefore, something is still off in Do Kwon’s calculations.
Where Stable Coin:
Terra’s biggest USP was an algorithmic stable coin UST pegged to a dollar using a complicated mechanism backed by LUNA. That’s what attracted people to Terra. But with that thing no more in the picture, I wonder who all would jump on to the Terra Bandwagon.
Can LUNA work?
If you stick around in the cryptoverse for an extended period, you develop this mindset. Nothing seems to be impossible. So here are a few reasons why I think Terra could work:
Some People Want to Watch the World Burn:
Yes. There are a few individuals who barely care about the vision and the endgame. All they want is to YOLO some money into the Terra ecosystem to see what happens this time around. These people invested in LUNA when it fell below a dollar. I think Luna 2.0 is way more promising by their standards.
We all know the impact a community can make on a project (look at Shiba and Doge). And Terra has created a community of loyalists. If these folks believe in Do Kwon and his castle of dreams, then there could be another wave of FOMO bringing people here.
I foresee a lot of inertia in packing your bags and starting from scratch in a different ecosystem. So, Do Kwon’s revival plan must be a ray of hope for developers building on the Terra Blockchain. They might stay back and restart.
What I am trying to say is that it is time that will tell the fate of this botched-up world. But it would be one heck of a place to watch. Now you could be someone who simply threw some money and tell your grandkids how big of a gambler you are. Alternatively, if it dies, it dies. No one has to know that you are so reckless with your money. Right?