Terra remained the focus of most of the headlines throughout May due to a spiral collapse that led to a loss of over $ 40 billion in investor capital. Despite early opposition from the community and widespread backlash from the likes of Binance CEO Changpeng “CZ” Zhao, Terra’s founder, Do Kwon, succeeded in restarting the crashed network with a new chain called Terra 2.0 (Phoenix-1).
The amended proposal to restart the network by increasing the emergence of liquidity, introducing a new liquidity format for Luna Classic holders (LUNC) before an attack and reducing distribution to TerraUSD Classic (USTC) owners after an attack, was approved by the community with 65% of the vote.
The new blockchain went live on May 28 after a hard fork. The new symbol remains Terra (LUNA) and the old one was changed to Luna Classic. With the new network recording, holders of LUNC, USTC and Anchor Protocol UST (aUST) were eligible to receive the new tokens.
Despite industry outrage against Do Kwon – founder and parent company Terraform Labs facing lawsuits and investigations in South Korea – major cryptocurrencies including Binance, Kucoin, FTX, Bitfinex and several others announced support for the Terra 2.0 chain.
Cointelegraph asked Binance to inquire about the reasons behind LUNC’s listing, especially as the market is still recovering from the $ 40 billion collapse. A Binance spokesman told the Cointelegraph:
Binance argued that the purpose of Terra 2.0 was to compensate those who had lost significant amounts of money in the collapse of the main network. As a platform, “Binance decided to allow people to trade in the released tokens to realize their assets.
CZ has also said that it is not very optimistic about the future of the Terra 2.0 ecosystem and that the decision to register the new symbol was based on helping investors recover part of their losses. Zhao told Cointelegraph:
“We still need to ensure continuity in people’s access to liquidity. We have to support the revival program in the hope that it will work. “
Kraken’s CEO, Jesse Powell, also defended LUNA’s registration, saying it was a community demand. However, he noted that registration does not necessarily equate to support for the controversial symbol.
Connected:Kraken CEO defends LUNA 2.0 listing: “Bitcoin traders do not pay their bills”
Customer satisfaction seems to be a common concern for the continued listing of the property. Whitney Setiawan, an expert in cryptocurrency, told the Cointelegraph:
“As a stock exchange, Bitrue’s main priority is customer satisfaction, as it is right that we give Bitrue our freedom to invest in assets of their choice. We are still closely following the development of the Luna Foundation Guard study and would take immediate action if the situation worsens. “
Terra 2.0 sees large fluctuations
The installation of the new network was nothing short of exciting. To begin with, many investors claimed that they had not received the appropriate compensation for the new flight. The Terra 2.0 team acknowledged the issue and said they would work to resolve the issue soon.
Many users also joked that the new air drop is a mockery, given that people have lost hundreds of thousands of dollars and received about $ 50 worth of new tokens instead:
Lost $ 300,000 $ LUNA
Got a $ 59 flight
Thank you do kwon and team
– Ash WSB (@ashwsbreal) May 29, 2022
The new ID, which was released from the air, began trading between many cryptocurrencies on May 28. However, as many warned, the new symbol showed a very large price fluctuation immediately on the first day of reboot and fell by over 70%. Many investors who received the new LUNA started selling as soon as they received it, which shows a lack of confidence in the new ecosystem.
LUNA was listed for $ 18.85 on the day of reboot but subsequently dropped to $ 5.71 before recovering half of the loss the day before the Binance listing. The symbol is currently trading at $ 6.44, according to Cointelegraph data, almost a third of its listing price.
Justin Hartzman, CEO of Coinsmart’s cryptocurrency trading platform, told the Cointelegraph: “Caution is always better than cure. Why list projects with very obvious flaws, which many celebrities have noticed on Twitter, and then ignore them? Stock exchanges must make the listing process safer and more rigid. Too much money and too many lives are at stake here. “
A user who reportedly lost significant amounts of money by investing in LUNC wrote:
“I see no fundamentals here and I see everything I get as a bonus as I wrote off everything as a loss and $ 0. If the others are not responsible, I will sell them all. “
Do Kwon has a track record of failed projects
There is a famous meme on Crypto Twitter that compares the fate of two fund managers, who each lost billions of dollars to investors. One of them is Bernie Madoff, the notorious financier who was sentenced to 150 years in prison after running a Ponzi scheme for 60 billion dollars – the largest in the world – and Do Kwon, who managed to restart a new network just two weeks after losing billions dollars.
In 2009, Bernie Madoff lost $ 60 billion to investors. He was sentenced to 150 years in prison.
In 2022, Do Kwon lost $ 60 billion to investors after Luna collapsed to $ 0. He then created Luna 2.0. image.twitter.com/CkCC8AKPVR
– Fintwit (@fintwit_news) May 29, 2022
The memo underscores the lack of oversight in the cryptocurrency space, where billions of dollars of mistakes and scams have little or no control or balance.
Terra’s stablecoin crash algorithm was not the first time Kwon has launched a failed pilot project. At the height of the Terra collapse history, it was revealed that Do Kwon was also behind another failed stablecoin project called Basis Cash (BAC).
Many experts also believe that even if stock exchanges can listen to the community and list the new symbol, it would be difficult to approve future projects led by Do Kwon. Zachary Greene, who runs the Greenery Financial cryptocurrency website, told the Cointelegraph:
“I believe that Do Kwon overriding measures will prevent Terra 2.0 from being approved and seen as a legitimate reboot. Whether he was responsible for the mismanagement of the reserves or not, he seems to be blamed by society and the cryptocurrency for the tragedy that befell the LUNC and USTC. In my opinion, all projects with him as leader, at least for the next few years, will be run by the cryptocurrency community.
The Terra and Terra 2.0 story is still evolving. Whether something malicious happened to stablecoin or whether it was just a failed attempt, only time will tell.
Even in traditional markets, however, we have seen time and time again how unsuccessful managers jump from one management position to another. It’s not shocking to see Do Kwon at the helm of Terra 2.0, but it should definitely get investors to stop and think twice before investing.
What makes the case against Kwon is his reluctance to anticipate the problems and act accordingly. Many have warned that the USTC connection is backed by volatile assets and Terra is using community funds to buy Bitcoin (BTC), but most of it went unnoticed amid high promises from the project’s executives.
The co-founder of Terra and the majority of Terraform Labs’ employees are currently under investigation for various charges, including tax evasion, market abuse and more. While it is not possible to blame the community for approving the reboot plan as they hoped to recover some of their money with the airdrops, leading Kwon could once again prove to be a problem for the community in the long run.
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