The recovery plan following the collapse of Terraform Labs’ stablecoin TerraUSD (UST) and its native token Terra (LUNA) began on a rocky path after the LUNA 2.0 cryptocurrency suffered a significant price correction hours after its launch on May 28. Rumored to be value around $30-50 (roughly Rs. 2,325- 3,875) by members of the Terra community prior to launch, the new governance token quickly shot up to an all-time-high of $18.87 (roughly Rs. 1,462) shortly after launch, only to crash to a low of $4.08 (roughly Rs. 316) by early Sunday.
The drop came shortly after Terraform Labs successfully distributed the LUNA 2.0 tokens to investors who held LUNA Classic (LUNC) and TerraUSD (UST).
2/ To reach this point so quickly speaks volumes about our incredible community of users, validators, developers, and exchange partners ????
We’d like to thank each and every one of you for making this possible ????
— Terra ???? Powered by LUNA ???? (@terra_money) May 27, 2022
What is Terra 2.0?
Terraform Labs, the core development firm behind Terra, had proposed a new blockchain. It took only a few days after that proposal was approved for Kwon to deploy another chain, the one that’s open for use today. Several applications have now migrated to the new chain, including Astroport, Prism, RandomEarth, Spectrum, Nebula, Terraswap, Edge Protocol, and others.
Before today’s launch, the governance voted to change the name of the original network to “Terra Classic,” whose tokens are now called LUNA Classic (LUNC), in order to position the newly launched Terra 2.0 as the main network. Unlike its predecessor, the new Terra chain exists without an algorithmic stablecoin and comes only with LUNA that has a fixed total supply of 1 billion tokens.
These LUNA 2.0 tokens will trade separately from the original LUNA Classic tokens, whose supply amounts to more than 6.5 trillion.
The main reason behind the airdrop of new LUNA coins on May 28, was to compensate Terra stakeholders on the Classic chain. They have been earmarked to receive 70 percent or (700 million) of the total LUNA 2.0 token supply. The amount of LUNA 2.0 airdrop each person gets varies depending on whether those tokens were held before or after UST’s depeg, according to an official announcement.
The airdrop is expected to be claimed shortly after launch, either through centralised exchanges or Terra’s own website. Several central crypto exchanges including Binance, Huobi, Kraken, Bitfinex, Bitrue, Kucoin, and Bybit said they are letting Terra supporters receive their allotted tokens from within their platforms.
Still, not all of the airdropped tokens are claimable at launch; only 30 percent of the initial supply can be immediately claimed. The remaining 70 percent of the airdrop amount has been staked directly with validators to ensure network security and those will vest in as long as two years.
Besides 700 million LUNA tokens divided among the two above investor categories, Terra’s community pool, an on-chain treasury fund, is set to receive 30 percent (300 million) of LUNA on the Terra 2.0 chain. The community pool is controlled by Terra governance to fund development activities. Of the total pool amount, 30 million are assigned for developers who have decided to remain and rebuild on the new Terra chain, according to an earlier announcement.
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