Despite the objections of the community, the validators voted for the appearance of the second chain. The new “luntik” will be available to owners based on two pictures taken before and after the collapse of the UST stablecoin. Most major crypto exchanges supported the appearance of a new branch.
Terra is a cryptocurrency project that has released an algorithmic UST stablecoin linked to the US dollar. The internal LUNA coin was used to maintain the exchange rate, but the lack of liquidity led to the untying of the UST rate and the depreciation of LUNA.
For the cryptocurrency market, the collapse of the stablecoin is not a rare case. But Terra made a lot of noise, since UST was in the TOP 3 by capitalization, and the network held the second place in the decentralized finance sector right after Ethereum. It was impossible to reach such heights without a development team and the support of a multi-million community. For this reason, the validators voted for the revival of the blockchain and the preservation of the Terra (LUNA) brand.
The new chain is not a fork in the classic form, since it will be built from the genesis block and will not inherit the transaction history. As a result of the restart, the stablecoin will disappear, the old LUNA will be renamed Terra Classic (LUNC), and the new branch will receive its former name. The development team is migrating to a new network, and Spectrum, Nebula, Prism, Astroport and other partners have already expressed their desire to support the new branch.
Among the cryptocurrency exchanges that supported the revival of the blockchain, Huobi and Binance can be singled out, and the Coinbase Cloud division, on the contrary, announced the suspension of support for Terra and any related chains. A wait-and-see position was taken in BitMEX, since the new branch must first gain the necessary reliability and liquidity.
Depending on the amount of UST and/or LUNA ownership, the refund amount and the terms of accrual of the remaining amount change. At the initial stage, no more than 30% of the initial amount will be transferred to the owners, and the receipt of the remaining amount will stretch over a period of six months to four years.
The refund of the amounts is the main stumbling block, because of which the community in the polls did not support the appearance of a new branch, calling for the redemption of LUNA with subsequent burning. So, speculators who bought UST for 10 cents will receive the same return as investors who bought UST for $1 before the collapse of the stablecoin.
The rejection of the UST stablecoin puts an end to the rapid recovery of Terra.
Over the past year, the main driving force for LUNA has been the desire of investors to get a yield of 20% per annum from UST staking on the Anchor site. At its peak, the amount of blocked funds exceeded $17 billion, of which 75% were investments in UST.
A number of contradictions and the pain of investors due to the loss of investments cast doubts on the successful restart of the project and the return of Terra to the lost indicators. Do you think Terra has a chance?