Terra 2.0: A crypto project built on the ruins of $40 billion in investors' money
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Terra 2.0 launced with the promise of helping to retrieve lost funds, but early indicators suggest launching a new token to compensate for the failure of another is a bad idea.
Terra remained the focus of the majority of headlines throughout May for its spiral collapse leading to a loss of over $40 billion in investors’ money. Despite some early resistance from the community and heavy backlash from the likes of Binance CEO Changpeng “CZ” Zhao, Terra co-founder Do Kwon managed to relaunch the collapsed network with a new chain called Terra 2.0 (Phoenix-1).
The amended proposal for the relaunch of the network by increasing the genesis liquidity, which introduces a new liquidity profile for pre-attack Luna Classic (LUNC) holders and decreases the distribution to post-attack TerraUSD Classic (USTC) holders, was approved by the community with a 65% vote in favor.
The new blockchain went live on May 28 after a hard fork. The new token stays Terra (LUNA) and the old one was rebranded to Luna Classic. With the new network launch, the holders of LUNC, USTC and Anchor Protocol UST (aUST) were eligible to receive the new tokens.
Despite industry-wide outrage against Do Kwon — the co-founder and the parent company Terraform Labs are facing lawsuits and investigations in South Korea — major crypto exchanges including Binance, Kucoin, FTX, Bitfinex and several others announced support for the Terra 2.0 chain.
Cointelegraph reached out to Binance to inquire about the reasoning behind its listing of the LUNC on its platform, especially when the market is still recovering from the after-effects of the $40 billion collapse. A Binance spokesperson told Cointelegraph:
“Binance listed LUNA on the Innovation Zone, which is a dedicated trading zone where users can trade new tokens that may have increased volatility and pose a higher risk than other tokens. Before being able to trade on the Innovation Zone, every user has to visit the web version of the Innovation Zone trading page and complete a questionnaire after reading the Binance Terms of Use.”
Binance claimed that the purpose of the Terra 2.0 was to compensate those who had lost a significant amount of funds during the crash of the main network. As a platform, “Binance decided to let people trade the airdropped tokens to realize their assets.”
CZ has also said that he is not very optimistic about the future of the Terra 2.0 ecosystem and that the decision to list the new token was based on helping investors recover some of their losses.
“We still need to ensure continuity of people's access to liquidity. We have to support the revival plan hoping that it may work.”
Kraken CEO Jesse Powell also defended listing LUNA, saying it’s the community’s demand. However, he did mention that a listing doesn’t necessarily equal an endorsement for the controversial token.
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