- LUNA price plummets nearly 38% despite a 200% increase in trade volume.
- Do Kwon, CEO of Terraform Labs, has written a proposal to fork LUNA to a new chain with a cap of 1 billion coins.
- Binance CEO CZ believes Do Kwon’s plan to save LUNA will not work as forking does not add value to the new fork.
- Is it a good time to buy Terra’s LUNA before the upcoming hard fork?
Update (May 18th): The Terra community is not responding well to Do Kwon's "Terra Ecosystem Revival Plan 2." The CEO of Terraform Labs has moved his recovery plan status to "final" a day after drafting it on the Terra Research Forum despite most users on the platform publicly criticizing the proposal. The Terra community is pointing to two main issues: new token LUNA Core distribution not taking into account the circulating supply available at the time of the purchase, and ignoring the massive losses incurred by TerraUSD (UST) holders, the algorithmic stablecoin allegedly pegged to the US dollar which collapsed last week more than 90% to its current value just below $0.1. Terra forum user "Fairdistributions" posted on Wednesday:
IF you want a fair fork. Please distribute people according to the supply they purchased at, or maybe take a snapshot before the last halt.
Despite South Korean authorities launching "emergency inspections" into domestic crypto exchanges "to enhance investors' protection", Do Kwon is moving forward with his LUNA recovery plan, which will see Terra Core release cut and a new network launch made available to validators next Saturday, May 21st.
Previous Update (May 17th): Do Kwon, CEO of Terraform Labs, is moving forward with his "Terra Ecosystem Revival Plan 2." Following last week's collapse of the Terra stablecoin peg to US dollars and the subsequent demise of its native token LUNA, which plummeted from $87.68 to the current $0.0002 levels, Kwon announced a collaborative plan of action with the Terra community. Do Kwon's post on the Terra Agora forum releases a specific short-term timeline for this recovery plan.
Within this action, Terraform Labs will hold a governance vote on Wednesday, May 18, on whether to pass a hard fork for Terra, similar to the famous DAO hack the Ethereum network experienced in 2016, which split blockchain networks into two tokens, Ethereum (ETH) and Ethereum Classic (ETC). In this case, the current worthless LUNA tokens will get converted to Luna Classic (LUNC) once the fork takes place. Holders, stakers, and developers of LUNC will get rewarded with brand new LUNA tokens that will be capped at 1 billion. If everything goes to the Terraform Labs CEO plan, the new LUNA network will be launched on May 27th.
Do Kwon’s proposal to fork Terra’s LUNA to a new chain has received criticism from Binance CEO and cryptocurrency proponents. The Luna Foundation Guard has spent $3 billion stabilizing TerraUSD’s peg, however, UST has failed to recover.
Terra’s LUNA struggles to recover despite forking plan
The Luna Foundation Guard has spent billions of dollars reinstating TerraUSD’s (UST) peg. However, UST price is struggling to make a comeback. At the time of writing, UST is priced at $0.082, 91.8% lower than its $1 peg.
Do Kwon, the CEO of Terraform Labs, came up with a recovery plan for Terra’s tokens. The Luna Foundation Guard Council proposed forking LUNA to a new chain, using a snapshot from before the attack on the blockchain.
The recovery plan proposes a cap of 1 billion coins, where 900 million tokens of the new chain are set aside to be returned to LUNA and UST holders from before the de-pegging event and chain hold, and the last 100 million tranche is to be staked at the network genesis state.
5/ There are multiple proposals on Agora on the best steps to move forward for the community – after having read many of them, I’ve put down my thoughts of what I think the best steps are: https://t.co/pJNXATzllz— Do Kwon (@stablekwon) May 13, 2022
Proponents criticize Do Kwon’s plan for LUNA recovery
Changpeng Zhao, CEO of the world’s largest cryptocurrency exchange, Binance, critiqued Do Kwon’s recovery plans and revealed that he does not believe that LUNA can recover and make a comeback to $120.
Zhao stated that,
This won’t work. – forking does not give the new fork any value. That’s wishful thinking. – one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).
On behalf of Binance, CZ asked the Terra team to compensate retail users first and supported the prioritization of the smallest wallets with UST deposits on Anchor. Binance has nearly $1.6 billion tied up in LUNA’s collapse.
1/5. Some interesting updates, full transparency and lead to protect users:— CZ Binance (@cz_binance) May 16, 2022
As it turns out, most UST pairs were 0 fee to begin with. (I didn't know that, our team had to tell me.) So, not much UST there.
We do have... https://t.co/ihxbHzwmK5
Kwon has requested community members for patience as Terraform Labs works on multiple tasks to stabilize UST, repeg it and drive a recovery in LUNA.
Still, the CEO of CryptoQuant revealed that market maker(s), including the ones hired by LFG, sent 84,000 BTC, equivalent to $2.5 billion, to multiple exchanges last week. It is unclear whether the BTC tokens were sold, but it is likely that Coinbase digested a majority of the selling pressure and efforts to recover algorithmic stablecoin UST failed.
Conclusion:— Ki Young Ju 주기영 (@ki_young_ju) May 16, 2022
Market maker(s), including the ones hired by LFG, already sent 84k BTC(~$2.5B) to multiple exchanges last week.
Not sure they finished selling, but it is highly likely for the accumulation from institutions since Coinbase digested the majority of selling pressure.
Larry Cermak, VP of research at IntoTheBlock, pointed out that LFG has gone from $3.1 billion in its reserves a week ago to $87 million now as the non-profit organization spent nearly $3 billion on defending UST’s peg. Despite the efforts, the stablecoin collapsed.
In summary, LFG has gone from having $3.1 billion in their reserves a week ago to now having roughly $87M. Which means they spent roughly $3 billion defending the UST peg and UST still collapsed. https://t.co/A9UBKnMJDH pic.twitter.com/bbF1wd2U5A— Larry Cermak (@lawmaster) May 16, 2022
VisionPulseTrades evaluated LUNA price trend and revealed that if the bottom is in, LUNA needs to gain confidence among investors to begin a trend reversal. If so, the next bullish target for is capped between $0.00025 and $0.00033.
A recovery to $120 is therefore unlikely for LUNA, as VisionPulseTrades emphasizes the demand for the token comes from investors expecting a recovery and a purchase of Terra by the LFG.
Terra LUNA's collapse dragged the whole crypto market
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