Cryptocurrency markets have seen a steep sell-off after the collapse of controversial blockchain project Terra.
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A new edition of the collapsed luna cryptocurrency is already continue to exist major exchanges — and it’s gotten off to a foul start.
Last week, supporters of the Terra blockchain project voted to revive luna but not terraUSD, a so-called “stablecoin” that plunged below its intended peg to the dollar, causing panic within the crypto market.
TerraUSD, or UST, is what’s referred to as an algorithmic stablecoin. It relied on code and a sister token, luna, to take care of a $1 value. But as digital currency prices fell, investors fled the stablecoin, sending UST tumbling — and taking luna down with it.
At its height, the old luna — now referred to as “luna classic” — had a circulating supply of over $40 billion.
Now, luna has a recent iteration, which investors are calling Terra 2.0. It’s already trading on exchanges including Bybit, Kucoin and Huobi. Binance, the world’s largest crypto exchange, says it’ll list luna on Tuesday.
Its launch has not gone well.
After reaching a peak of $19.53 on Saturday, luna dropped as little as $4.39 just hours later, in line with CoinMarketCap data. It has since settled at a price of around $5.90.
Analysts are deeply skeptical about the probabilities of Terra’s revived blockchain being successful. It’s going to need to compete with a number of other so-called “Layer 1” networks — the infrastructure that underpins cryptocurrencies like ethereum, solana and cardano.
Terra is distributing luna tokens through what’s called an “airdrop.” Most will go to those that held luna classic and UST before their collapse, in an effort to compensate investors.
But many investors burned by the debacle are unlikely to trust Terra a second time, experts say. Vijay Ayyar, head of international at crypto exchange Luno, said there’s been a “massive loss in confidence” within the project.