According to data from Coinmarketcap, the tokens were issued at $17.8, eventually rising to $19.53 on May 28. However, in less than 48 hours, it plunged more than 70 per cent to Rs$5.45 on Monday.
A key element of Terra’s revival plan was to deliver new Luna tokens to holders of the project’s now heavily depreciated UST stablecoins, as well as holders of older, existing Luna tokens.
The oldest tokens have been renamed Luna Classic (LUNC), with a market cap of less than $1 billion, up from over $40 billion a couple of months ago.
According to market participants, it is unclear how the new Moon will be secured and there is a lack of transparency around the reserve assets needed to back the coin. Things are not likely to change any time soon, they say.
Sharat Chandra, vice president of research and strategy at EarthID, said, “Forking the chain without addressing the underlying algorithm that failed to maintain linkage was wishful thinking for the founder and community members who voted for Terra2.0.”
Investors had lost faith in the Terra ecosystem, and a mere chain nomenclature change without correcting the root cause of the debacle will not help the cause of Terra’s rebirth, he added.
The total market capitalization of Luna.20 is estimated to be around $1.28 billion, based on the current price and the total circulation of 210,000,000 Luna 2.0 tokens as of now. Its supply is capped at 1,000,000,000, according to the data.
However, investors are also not very interested in the token after the Terra Classis debacle. Luna 2.0 volumes tanked around 66 percent as a token worth $130.09 million changed hands in the last 24 hours.
Vikram Subburaj, CEO of Giottus Crypto Platform, said that the new Luna 2.0 token is in the process of being airdropped to former LUNA and UST holders.
“While some exchanges have opened trading, LUNA’s current trading liquidity is limited by the airdrop schedule as well as its allotment schedule,” it added. “Therefore, high volatility in trading prices is expected for the first month or so.”
Market participants advise investors to wait for market balance and stability before entering into a long-term trade. Short-term clearances should be avoided, they said.
Based on current market cap, Luna 2.0 ranks not even among the top 2,800 cryptocurrencies, making it extremely risky, Subburaj said. “Investors should stick to the top 100 crypto asset names with the most weight for bluechips.”
Luna sees an uncertain future and investor disillusionment may lead to the irrelevance of algorithmic stablecoins. She is expected to fulfill the fate of previous somewhat failed stablecoins like Basis Cash and Iron.
Terra’s original native coin, Luna Classic (LUNC), led to a massive erosion of crypto markets’ wealth, as its USD Terra (UST) algorithmic stablecoin de-pegged from its $1 value. LUNC is asking for a few fractional pennies currently from $118 at its peak.
Darshan Bathija, CEO and co-founder of Vauld, the crypto community, is still visibly skeptical about the reliability and viability of the project, prompting investors to immediately withdraw their money.
“When investing, what you have to take into account is the reliability, the tokenomy and the key characteristics of the project,” he added. “Trust is at the core of any financial system, but you have to do your homework well before you invest.”
(Disclaimer: The recommendations, suggestions, points of view and opinions given by the experts are their own. These do not represent the views of the Economic Times)