LUNA Classic (LUNC) is the native coin of Terra LUNA left over after the collapse of UST/Luna and the establishment of a new Terra chain. Kwon's recovery plan includes creating a completely new chain to conduct future transactions. The old chain is Chia into LUNA Classic and Terra. Terra will be the name of the new chain (known as LUNA 2.0), while LUNA Classic (LUNC) is the native Token of the original Terra LUNA blockchain.
The term “classic” is probably a reference to the Chia of Ethereum and Ethereum Classic following the Ethereum decentralized autonomous organization (DAO) breach in 2017. This appears to be another marketing ploy. promote the UST collapse as “ Terra's DAO moment,” according to Kwon.
The old version of the Terra protocol has been expanded to support stablecoin developers building decentralized finance (DeFi) projects on Terra. The project includes two cryptocurrencies: Terra and LUNA. Terra is a stablecoin standard Peg to fiat and other currencies. For example, TerraUSD (UST) is Peg to the US dollar, while TerraKRW (KRT) is Peg to the Korean won.
The native Token , Terra, is the Staking and governance asset of the network. Users Stake LUNA to gain a position in governance and become validators, while receiving rewards. Users can also burn LUNA to mint Terra 's UST Token or another Token Peg to their local fiat currency. However, it should be noted that although these stablecoins are Peg to the value of fiat currency, they are not backed by fiat currency. Instead, the LUNA Token is considered an Algorithmic Stablecoin.
An algorithmic stablecoin is an asset that has value through a set of rules rather than being Peg to another asset. This method allows Terra users to invest in the value of these coins without having to hold their physical counterparts.
However, stablecoin UST lost its price peg on May 9, after nearly 18 months of holding value against the US dollar. The loss of the peg set off a chain reaction that led to the collapse of UST and the cryptocurrency Terra (LUNA), Bitcoin and the larger cryptocurrency market, which has yet to fully recover.
This article will discuss the history of the Terra blockchain, Terra LUNA 2.0, and the differences between LUNA 2.0 and LUNA Classic.
Terra 2.0 is the latest version of Terra (LUNA), proposed by Do Kwon as a rebirth strategy. The goal is to propose a Fork of the Terra blockchain and conduct an Airdrop to crypto investors affected by the recent market downturn. The main aim is to restore trust in this stablecoin through the new project of the Terra ecosystem.
Terra 2.0's policy is to occasionally issue additional LUNA Token to crypto investors who purchased more than 10,000 LUNA before the stablecoin was severely damaged. This is to prevent Terra 2.0 from being sold immediately. More than 300% of crypto investors' LUNA Token will be unlocked immediately, with the remaining 70% released within two years. These crypto investors will receive new Terra 2.0 Token after six months.
To validate transactions on the Terra 2.0 cryptocurrency blockchain, a conventional proof-of- Stake (PoS) consensus mechanism is used. A total of 130 validators participate in network consensus at any given time, with voting power determined by the number of LUNA 2.0 connected to each node. LUNA 2.0's Gas Price and 7% fixed annual inflation rate are used to generate rewards.
By delegating LUNA 2.0 Token to a validator of their choice, LUNA 2.0 Token holder participate in consensus. Validators, like delegates, often Stake their own. Therefore, before awarding rewards to delegates, the validating node retains a commission in this scheme.
The rewards generated by Terra 2.0 coin delegates vary, depending on the validator's voting power. Those with more voting power naturally earn more rewards, but they must distribute them to a wider group of delegates.
Authorization can be done using the Terra Station interface, but it should be noted that this comes with risks. For example, validators could be penalized for misconduct, leading to cuts in Stake LUNA 2.0. Cuts can occur even if validators are mistakenly turned off for a short period of time.
Terra was founded in 2018 by Do Kwon and Daniel Shin and launched mainnet in 2019. Kwon and Shin built Terra to provide users with the stability of fiat currencies while leveraging the power of blockchain technology to make transactions faster and cheaper than traditional payment solutions. The two founders also believe that such options will increase blockchain adoption.
Terra is backed by Terra Alliance. Terra Alliance is a group of businesses and e-commerce platforms from around the world driving Terra adoption. The businesses in Terra Alliance have a combined value of tens of billions of dollars and more than 45 million customers across companies.
Despite their notable similarities, LUNA Classic and LUNA 2.0 are not the same. The Terra network has been Chia into two chains based on a new governance plan. Terra Classic with Luna Classic ( LUNC ) Token will be the old chain , while Terra with LUNA Token will be the new chain called LUNA 2.0.
Legacy LUNA will coexist with LUNA 2.0 instead of being completely replaced. Any decentralized applications (DApps) launched for Terra Luna will be prioritized for LUNA 2.0, and the development community will begin building DApps and providing utility for the new Token . However, it does not include an Algorithmic Stablecoin.
However, this does not rule out the possibility of Terra Classic losing its community as many investors and traders oppose the recovery plan of Do Kwon and the new chain . In fact, Terra Classic still retains a large Watcher , and the classic community has agreed to start burning as many LUNC Token as possible to reduce the coin supply and increase the price of each Token.
There are 130 active PoS validators securing Terra LUNA 2.0. In light of the disaster that befell the previous version of LUNA, investors in the cryptocurrency world have reasonable concerns about the coin's stability. Since launch, there has been no evidence of hacks or scams, but investors should be aware of the risks before committing to LUNA 2.0.
The cryptocurrency market is very volatile, and the lack of regulation makes it riskier than the traditional stock market. Therefore, do due diligence on blockchain-based projects before investing your hard-earned money.
The future of LUNA 2.0 is impossible to predict with complete precision, XEM the demise of its stablecoin UST. In the past, LUNA has been home to some very popular DeFi projects, even if there aren't many worth mentioning right now. Terra 's overtake of Binance Smart Chain (now BNB Chain) to become the second most popular DeFi platform is also not something that can be ignored.
However, the future cannot be predicted based on past events. The success of Terra LUNA 2.0 depends on the performance of the new chain and efforts to regain investors' confidence. Of course, there's always the possibility that Ethereum's eventual upgrade to PoS could surpass competitors like Terra, as Ethereum has more attention than most other projects. But nothing is certain until Ethereum's implementation is complete.
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Mr. Giao
Bitcoin Magazine
