Cryptocurrency markets have seen a steep sell-off following the collapse of the controversial blockchain project Terra.
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A new version of the collapsed Luna cryptocurrency is already live on major exchanges — and it’s off to a bad 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, sparking panic in the crypto market.
TerraUSD, or UST, is what is known as an algorithmic stablecoin. It relied on code and a sister token, luna, to maintain a $1 value. But as digital currency prices plummeted, investors fled the stablecoin, causing UST to tumble — and luna to take with it.
At its peak, the old luna — now known as “luna classic” — had a circulating supply of more than $40 billion.
Now luna has a new iteration, which investors are calling Terra 2.0. It already trades on exchanges including Bybit, Kucoin, and Huobi. Binance, the world’s largest crypto exchange, says it will list Luna on Tuesday.
Its launch did not go well.
After peaking at $19.53 on Saturday, luna dropped to $4.39 just hours later, according to CoinGecko data. It has since settled at a price of about $5.90.
Analysts are highly skeptical about the chances of Terra’s revived blockchain becoming a success. It will have to compete with a host of other so-called “Layer 1” networks – the infrastructure underlying cryptocurrencies such as ethereum, solana and cardano.
Terra distributes luna tokens through what is called an ‘airdrop’. Most will go to those who had 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 the international crypto exchange Luno, said there has been a “major loss of confidence” in the project.