Please note: May 7, 2022 marked the end of the Terra Luna token as we know it. Indeed, the price of LUNA fell very close to 0. The reason? Firstly, the fall of Anchor’s ANC, which then represented the interests of investors who had invested in the UST.
Then, on May 9, UST cash reserves traded below parity (UST was a stablecoin, backed by the value of the dollar). At the same time, LUNA sales exploded, driving down UST – USD stability guarantees. We are therefore entering a vicious circle.
In an attempt to maintain equilibrium and prevent investors from being duped, Terra crypto is issuing a lot of LUNA. Despite all these measures, the share and stock price of Terra lost value, and even though the company sold $1.5 billion in liquidity, the panic spread and the share price collapsed by 99.9%.
But the story doesn’t end there. Do Kwon, Terra’s founder, left South Korea in May 2022. He was finally arrested in March 2023, in Montenegro, before being sentenced to 4 months in prison for falsifying identity papers. He faces extradition to South Korea as well as to the USA, where he is actively sought / expected.
First of all, it’s important to understand that when we mention the idea of crypto Terra (LUNA), we’re really talking about version 2.0. of this asset. Before the latter’s collapse, the first-generation cryptocurrency was the Terra blockchain protocol, which was derived from Terra Classic and based on the principle of stablecoin, linked to the US dollar and other real currencies around the world. As a reminder, a stablecoin is a coin that indexes itself to the value of a fiat currency. Despite its collapse in 2022, this coin now exists under the name LUNC and is now worth just a few cents after exceeding $70 some time before its fall.
With its new Terra blockchain, the company wished to continue the legacy left by Terra Classic, albeit by parting with one of its core principles: there is no longer any correlation with the UST stablecoin. After the collapse of many cryptocurrencies, the idea of (LUNA)’s founders was to build an equivalent force, while learning from the mistakes of the former asset. At its peak, Terra Classic was considered one of the most promising cryptos on the global market.
In the light of current events, the history of Terra is necessarily tumultuous. To begin with, we have to go back to January 2018 to trace the creation of the Terra ecosystem. The project was the brainchild of Daniel Shin and Do Kwon. It featured a simple principle, namely the rapid adoption of blockchain technology and making cryptocurrencies accessible based on price stability and, therefore, indexing their wedge to the price of specific fiat currencies, the US dollar, first and foremost.
The collapse of Terra Classic turned everything upside down, and although Kwon published a recovery plan and was forced to carry out the “hard fork” technique on Terra, he was quickly criticized for his actions and the new plan. Regardless, Terra Classic launched its new Terra blockchain on May 27, 2022, attracting many asset owners en masse to the old blockchain through various rewards.
CEO of Terraform Labs and founder of the Terra ecosystem, Do Kwon’s actions are made public by the many jurisdictions investigating him, and everything suggests that the empire he built was nothing more than a house of cards worthy of the greatest deceptions. Indeed, it’s almost astonishing that the company and its crypto are still alive after all the illegal actions uncovered by the SEC and other financial jurisdictions. The former Stanford University Fellow faces long years in prison between the USA and South Korea.
Having been arrested in Montenegro for passport forgery on March 23, 2023, after several months on the run, the entrepreneur is expected to be extradited to the USA or South Korea, where he faces 100 and 40 years in prison, respectively.
In deliberately deceiving investors, Kwon didn’t stop there: he transferred most of his assets into Bitcoin, making it impossible to recover this money. The list of charges worldwide is immense, and logically, the deception perpetrated by Kwon and his associates jeopardizes the future of this cryptocurrency.
What about Terra’s future? Will Terra recover? Generally speaking, there’s always an interest in creating a cryptocurrency, whether a coin or a non-fungible token. While the primary version of Terra aimed to democratize access to cryptocurrency by indexing it to real currencies, as mentioned above, Terra 2.0 featured a slightly different principle.
Today, Terra 2.0. is a unique crypto in that it continues to be based on a model that has been severely undermined. Without the UST algorithmic stablecoin, this asset aims to preserve the Terra ecosystem with the help of hundreds of developers of DeFi, i.e., decentralized applications.
Many of the initial projects of the first blockchain have migrated to this new blockchain, and in this sense, we can cite several examples:
If we stick to the general principle behind the creation of this ecosystem, it’s tricky to relate facts to the problems encountered by this company. For many specialists, Do Kwon himself could have caused the collapse, as Terraform Labs sold millions of assets just days before the share price plummeted. In any case, the design of this 2.0. asset remains astonishing, and it is difficult to explain its precise reasons today.
Before its demise, the Terra protocol ran on its own blockchain and integrated a proof-of-stake (PoS) mechanism. LUNA could be staked by users becoming validators.
Terra had great potential thanks to the linked stablecoins, but today and following the descent into hell experienced in May 2022, the system has changed dramatically.
Still in existence, the Terra.Money ecosystem is the only plausible functionality for the future of cryptocurrency. Thanks to a solid base of applications created by developers, LUNA crypto users can access numerous DeFi solutions.
Terra has, therefore, been designed to offer developers the opportunity to create advanced tools thanks to smart contracts and, thus, to design dApps. These same applications benefit from high transaction speeds and relatively low commission costs.
LUNA is, therefore, the network’s native token and its primary use is still to protect the network against the overuse of specific resources. This also includes using it to pay commissions to operators on the system.
Taking about Terra staking, it is still possible to buy Terra (LUNA) and even (LUNC), the former crypto renamed following the fall probably caused by its founder. Historically, all major cryptocurrency exchange platforms offer LUNA for sale and purchase. Most of these platforms accept fiat currencies but also allow buying LUNA with other well-known cryptocurrencies. It is possible to combine the purchase of LUNA with Bitcoin or Tether, all on platforms such as Huobi Global or Kraken.
Almost paradoxically, the highly reputed Binance platform (see review) has openly announced that it will cooperate with the various financial regulatory authorities in the legal proceedings brought against Do Kwon, but it remains, to this day, one of the best platforms for buying LUNA from Terra.
How do I buy LUNA on Binance? First of all, you must register on the platform and log in before proceeding to the verification page. This is a secure procedure and a classic one in crypto-currencies.
Once your account has been verified, you must go to the platform’s “buy crypto” section. Here, you’ll find a range of payment methods, from traditional fiat currencies to crypto-currencies if you already have some in your Binance account.
Then click on the “buy” button and select the desired currency. The first one selected is always Bitcoin or Ethereum, but it is possible to change it to LUNA.
Next comes the moment to adjust the selected value before, of course, confirming the purchase. Once you’ve confirmed your purchase, getting your LUNA tokens only takes a few seconds. Generally speaking, the process is similar on Binance and all other crypto-currency exchange platforms.
As a reminder, we’re talking about Terra (LUNA), the native token of the Terra ecosystem that came into being in May 2022, shortly after the fall of (LUNC). When it comes to investing in cryptocurrencies, it’s obvious to consider all the data and the news surrounding a specific asset. In the case of Terra Luna, it’s impossible not to bear in mind the legal problems encountered by its founder and the fragility of this universe over the last few months.
Approaching a unit value of 10 euros at its inception, the token gradually plummeted over the following summer months. Subsequently, news of Do Kwon’s whereabouts significantly boosted interest in and the value of Terra, which was only a few weeks old. Exceeding 6 euros in value during September, the asset resumed a classic trend and has fallen ever since. For many months, the price of Terra Luna has been worth between 1 and 2 euros. The same happens with Terra price to USD.
Thus, The cryptocurrency has lost over 50% of its value in less than a year of existence, which is logically a drag on all investors. It’s hard to imagine cryptocurrency regaining its initial value, even more so if we take into account the news surrounding this ecosystem.
However, the relatively attractive price of the asset at present could attract many investors who, with a certain logic, could continue to believe in the system put forward by the Terra universe.
What about Terra’s prediction for the future? In its early days, Terra (LUNA) offered some exciting and innovative features in the cryptocurrency world. The fall of the former asset has turned this aspect on its head, with the absence of stablecoins linked to (LUNA). The opportunities are as present as ever around this universe, and its blockchain remains, despite everything, something to follow in the future.
However, it’s impossible to ignore the news surrounding Terra itself. As innovative as the concept may be, it has been based on a large-scale deception, and in 2023, it’s almost surprising that this cryptocurrency is still available for exchange. The future of (LUNA) is highly uncertain, and we’ll have to follow the extradition of its founder to the USA or South Korea to find out whether or not this principle can endure over time.
About the author
Word enthusiast, writer, and travel lover, Lucia has more than 8 years of experience in cryptocurrency writing in Italian, Spanish, English and Portuguese.
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