Terra 2.0 is officially in construction. Here’s everything LUNA holders need to know as an airdrop begins.
The unexpected collapse of the Terra ecosystem has shook the crypto community in recent weeks. Everything came crumbling down once its algorithmic stablecoin (UST) lost its dollar parity, leaving many investors with nothing as LUNA actually sank to $0.
The community has now voted on and adopted a proposal that would essentially result in the fork of a new chain, but with significant differences. Let’s get started.
A Quick Summary
UST, the algorithmic stablecoin developed on top of the Terra protocol and the driving engine behind its whole ecosystem, lost its peg on May 9th. A few days later, it was trading at roughly $0.30, which was 70% less than its planned worth of $1.
Because of how the algorithm works, this created a fantastic arbitrage opportunity in which traders could redeem 1 UST (trading below $1) for $1 worth of LUNA. This design was meant to damage the UST and restrict its supply, hence increasing its value. However, selling pressure was intense, and UST never got near to its $1 price.
This enabled merchants to produce LUNA in excess, resulting in a large supply of more than 6 trillion LUNA in just a few days. Needless to say, such rapid supply expansion with no way to absorb it resulted in the unavoidable — LUNA’s price plummeted to $0.
In less than a week, the entire Terra ecosystem was wiped out, and billions of dollars vanished from the market, in an event that will live on in the halls of crypto history.
Terra 2.0 is born, but there will be no algorithmic stablecoins this time.
Do Kwon, the protocol’s founder and CEO, proposed a rebirth strategy, arguing that “Terra is not only UST.” Without going into specifics about how the idea evolved over a few weeks, the Terra community and validators voted and accepted the proposition, and the tone was set.
The final proposition was voted on on May 25th. The proposition was adopted by 65.5 percent of those who voted, abstained by 20.98 percent, and rejected by 13.20 percent.
Terra Ecosystem Revival Plan 2 hopes to witness the emergence of a new Terra chain without an algorithmic stablecoin. The former chain will be known as Terra Classic, and its LUNA will be known as LUNC. The token for the new chain will be called LUNA.
Multiple discussions have proven to support for the initiative as of this writing. These are some examples:
In response, Binance, the world’s largest exchange by trading volume, stated:
The Terra community just passed a vote to “Rebirth Terra NEtwork.” We are working closely with the Terra team on the recovery plan, aiming to provide impacted users on Binance with the best possible treatment. Stay tuned for further updates.
In summary, the proposal provides information on the ecosystem’s critical app developers, as well as how LUNA will be airdropped to LUNA classic stakeholders, holders, UST residual holders, and app developers.
How Much Will You Get From the LUNA Airdrop?
One of the most hotly debated subjects is the upcoming LUNA airdrop and how it will be allocated to LUNC token holders.
To summarize, the distribution looks like this:
- Community pool – 30%
- Pre-attack LUNA holders: 35%
- Pre-attack aUST holders – 10%
- Post-attack LUNA holders – 10%
- Post-attack UST holders – 15%.
Furthermore, Terraform Labs’ (TFL) wallet will be taken from the whitelist for the airdrop, which aims to create “Terra a totally community-owned chain.”
All tokens will have an initial unlock and a vesting period that varies based on a set of conditions.