Cryptocurrency LUNA “saved” after uncontrolled collapse?

“Terra 2.0 is coming. With overwhelming support, the Terra ecosystem voted on Proposition 1623, calling for the birth of a new blockchain and preserving our community.” – Terra’s official Twitter account said.

They will effectively create the new Layer Terra Blockchain without the need for an algorithmic Stablecoin system. The old Blockchain will be called Terra Classic (LUNC) and the new Blockchain will be called Terra (LUNA). The LUNA token is new and should not be confused with the old token despite the same name, Terra’s Twitter post emphasized.

This proposal has 65% (about 200 million votes) in favor of the plan, while 21% (about 54 million votes) and 13% (about 41 million votes) do not pass. Votes are made based on LUNA token ownership with one vote per token, not per user.

Terra believes that the crisis has passed the threshold, so the plan to restart is implemented on May 27.

Under the terms of the proposal, Terra will issue tokens to community members, including those who have never sold their old LUNA tokens or their stablecoin UST, in the context of the ecosystem. downward.

The Terra community approved the proposal to revive the LUNA cryptocurrency. Photo: Terra (LUNA)

According to the plan, the Tokens will be distributed as follows: 30% to the community team, 35% to LUNA holders before the crisis, 10% to UST holders before the crisis, 10% to UST holders. hold LUNA after the crisis and 15% to UST holders after the crisis.

“This plan will make Terra a fully community-owned chain. Believe that this is an important step to empowering our ecosystem.” – Terra emphasized.

On May 7, the Terra USD algorithmic stablecoin (UST) fell below the $1 peg, which has always been supposed to hold a 1:1 ratio to the USD. This has dragged down the rest of the crypto market as well.

LUNA initially hit an all-time high of around $119 in April, just weeks before it dropped more than 99% to its current level of $0.0001862, according to data from CoinMarketCap. Algorithmic stablecoins are now defunct, and UST shares the same fate after plummeting from a peg of $1 to $0.0862.

Stablecoins backed by LUNA, among other cryptocurrencies like Bitcoin and Avalanche, through arbitrageurs swap or sell LUNA and UST to keep the value of the Stablecoin at a $1 peg.

As an algorithmic stablecoin, UST is distinct from public reserve-backed stablecoins like Tether (USDT). It is also different from USD Coin (USDC), which is backed by cash equivalent reserves issued by centralized institutions.

This situation has caught the eye of the Stablecoin space as US government officials and other regulators globally have begun to discuss severe containment measures for digital assets.

The launch of LUNA 2.0 will be a test of whether the community is as strong as people say. In fact, many people were wary of founder Do Kwon and Team Terra after the collapse of LUNA and UST.

It is unclear whether other crypto exchanges will consider listing the new LUNA token following the demise of the old token. However, many in the crypto community on Twitter have argued that it will not appear on centralized exchanges out of fear of history repeating itself.

“Time will tell whether Terraform Labs will successfully restore LUNA?” – Page TechCrunch question.