Cryptocurrency markets have seen a steep sell-off after the collapse of 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 gotten 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, causing panic in the crypto market.
TerraUSD, or UST, is what’s known as an algorithmic stablecoin. It relied on code and a sister token, luna, to maintain a $1 value. But as digital currency prices fell, investors fled the stablecoin, sending UST tumbling — and taking luna down with it.
At its height, the old luna — now known as “luna classic” — had a circulating supply of over $40 billion.
Now, luna has a new iteration, which investors are calling Terra 2.0. It is already trading on exchanges including Bybit, Kucoin and Huobi. Binance, the world’s largest crypto exchange, says it will list luna on Tuesday.
Its launch has not gone well.
After reaching a peak of $19.53 on Saturday, luna dropped as low as $4.39 just hours later, according to CoinMarketCap data. It has since settled at a price of around $5.90.
Analysts are deeply skeptical about the chances of Terra’s revived blockchain being a success. It will have to compete with a host of other so-called “Layer 1” networks — the infrastructure that underpins cryptocurrencies like ethereum, solana and cardano.
Terra is distributing luna tokens through what’s called an “airdrop.” Most will go to those who held 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 international at crypto exchange Luno, said there’s been a “massive loss in confidence” in the project.