Terra’s new blockchain, which holds the $LUNA2 token and is built without an algorithmic stablecoin, saw a rocky launch over the weekend, seeing its price plunge as investors were selling their airdropped tokens.
The token’s price plummeted from around $15 to a low below the $5 mark as Luna Classuc ($LUNC) token holders were airdropped tokens on the new chain and quickly sold them presumably in a bid to recover their losses.
While several cryptocurrency exchanges including Bybit and OKX were quick to support the airdrop, Binance opted to delay its support. Shortly after the leading cryptocurrency exchange announced it was airdropping tokens to users and would later on open withdrawals, the price of LUNA2 surged.
Terraform Labs’ algorithmic stablecoin UST – now known as UST Classic – lost its peg last week after a $500 million withdrawal from its Anchor Protocol led to a large sale on Curve, where liquidity was low. The sale saw UST lose its peg and triggered a bank run. Because of the algorithmic system behind UST, trillions of LUNA – now LUNC – were printed while the stablecoin’s value kept on dropping.
Following the collapse of both LUNA and UST, the core development firm behind Terra, Terraform Labs, proposed a new blockchain that was quickly approved by the wider community.
Several decentralized applications including Prism, RandomEarth, Nebula, Terraswap, Edge Protocol, and others have now migrated to the new chain. After the launch of the new chain, the original network is now called Terra Classic, with its tokens being LUNA Classic (LUNC).
The new chain’s LUNA has a fixed total supply of 1 billion tokens, which trade separately from the original LUNA Classic, which saw its supply balloon to 6.5 trillion after UST’s collapse.
Notably, Binance CEO Changpeng Zhao has been among the fiercest critics of Terraform Labs after the collapse of the Terra ecosystem, but vowed to support its community however it chose to move forward.
As CryptoGlobe reported, analysts at Bank of America, the second-largest U.S. bank, have argued that concerns surrounding a so-called crypto winter or contagion risk associated with the collapse of the Terra ecosystem are unfounded.
Pain for the Terra ecosystem hasn’t ended yet, however, as one of its decentralized finance protocols, Mirror, has recently been hacked for over $2 million in cryptoassets. The hack occurred shortly after it was revealed the project suffered a security breach that saw hackers steal $90 million in October 2021.
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