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Terra Luna 2.0: Your Ultimate Guide

Terra Luna 2.0 coin with green background image of man trading with smile
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All you need to know about Terra Luna 2.0

In May 2022, the Terra network released their new coin called the Luna 2.0. The Terra Luna 2.0 coin started trading at £14.31 and spiked to £15.71 within the first hour of its trading. However, the coin soon proved to be unsustainable after its launch.

This is because Terra's old coin, the Terra classic, coexists with the Terra 2.0 and has a higher market cap, £772 million, compared with Luna 2.0 at £161 million.

The Binance, KuCoin, and OKX cryptocurrency exchanges added the new Luna 2.0 token to their platforms. However, the token remained underwhelming and mostly traded between £1.10 and £1.50 in the subsequent months, except for a surge of roughly 200% on 9 September.

The arrest warrant for Do Kwon, founder of Terra, issued by a South Korean court later in September contributed to Terra Classic plummeting more than 20% and Terra Luna 2.0 going down by 40%.

In addition, Luna 2.0 was not immune from the FTX scandal and hit an all-time low of £1.16 in November 2022.

What is Terra Luna 2.0?

Kwon proposed a hard fork for the Terra blockchain, resulting in the launch of Terra 2.0, which led to a 65.5% majority approval. The new Terra does not have the algorithmic stablecoin, and the Terra Builders Alliance provided technical details on integration, DApp migration, and rebranding of the original chain as Terra Classic.

The old LUNA tokens were renamed LUNC, and coin minting or burning options were disabled. The launch of the new blockchain came on 28 May, 2022.

Terra 2.0 introduced a policy to issue extra Luna tokens to crypto investors who bought more than 10,000 LUNA before the stablecoin crash. This move aimed to prevent a sudden sell-off of Terra 2.0. 300% of the investors' Luna tokens were unlocked immediately, while the remaining 70% will be issued over two years. After six months, these investors will receive the new Terra 2.0 tokens.

What is Luna classic?

Luna Classic is the coin left behind after the collapse of UST/Luna and the establishment of the new Terra chain.

Kwon's plan involved creating a new chain named Terra (Luna 2.0) for future transactions, while the old chain was split into two, the Terra and Luna Classic (LUNC).

The term "Classic" is similar to Ethereum Classic, which split from Ethereum following a hack in 2017. The old version of the Terra protocol supported stablecoin developers in creating Terra DeFi projects, including Terra and Luna, with Terra being pegged to fiat and other currencies such as UST to the US dollar and KRT to the South Korean won.

Terra's native token, Luna, served as the network's governance and staking asset. It was also used to burn and mint stablecoins tied to fiat.

These stablecoins weren't backed by fiat, but were algorithmic. The system enabled users to invest in stablecoins without possessing their physical counterparts. However, on 9 May, UST was unpegged from the US dollar, which triggered a chain reaction, leading to the UST and Luna crash and a larger cryptocurrency sector decline from which it is yet to recover fully.

How does Luna Classic work?

The distribution of the new Luna tokens in Terra 2.0 is divided into predetermined groups. The community pool and developers receive 30% and 10% of the total token distribution, respectively. Pre-crash LUNA holders get 35% of the new tokens, while pre-crash UST holders get 10%. Post-crash Luna holders and staking derivatives are getting 10% of the new tokens, with 30% unlocked at Genesis and the remaining 70% vested over two years, subject to a six-month cliff.

Post-crash UST holders are getting 15% of the tokens, with 30% unlocked at Genesis and the remaining 70% vested over two years, subject to a six-month cliff.

Additionally, all LUNA token holders with at least 10,000 tokens are receiving new coins to ensure equal initial liquidity profiles.

It's important to note that delegating Luna tokens to validators comes with risk, as validators can be penalized for misbehaviour, resulting in staked tokens being slashed. In terms of incentives, rewards for delegators depend on the voting power of the validators, with those having more voting power earning more rewards. However, these rewards must be dispersed among a wider pool of delegators. Delegating can be done via the Terra Station interface.

How does Terra Luna 2.0 work?

A classic PoS validates the Terra Luna 2.0 transactions on the cryptocurrency blockchain. 130 validators engage in the network consensus at any given time with voting privileges that are decided by the quantity of Luna 2.0 on the current node. To produce rewards, gas fees and a 7% fixed annual Luna 2.0 inflation are used.

Luna 2.0 token holders participate in the consensus process by delegating their tokens to a validator of their choice. Validators typically contribute their own stake and take a commission before distributing rewards to delegators.

In Terra 2.0, coin delegators are incentivized based on the voting power of validators. Validators with higher voting power earn more rewards, which are then distributed among a larger pool of delegators. The delegation process can be done through the Terra Station interface, but there is a risk involved.

Validators can be penalized if they behave improperly, which could result in a loss of staked Luna 2.0. Slashing penalties can occur even if the validator is accidentally turned off for a short period.

It is important to note that validators also put up their own stake, similar to delegates, before being able to reward delegators. This means that the validator has a vested interest in maintaining good behaviour to avoid losing their stake. Additionally, delegators can choose to delegate their LUNA 2.0 tokens to a validator of their choice, giving them a say in the consensus process.

Overall, delegating LUNA 2.0 tokens can provide a way for investors to earn rewards while also participating in network governance. However, it is crucial to understand the risks involved and to choose validators carefully to minimize the chances of penalties or loss of staked tokens.

Investing in Terra Luna 2.0

If you're interested in purchasing Luna 2.0 tokens, a cryptocurrency exchange is needed to convert your fiat currency into Luna. However, since Luna was delisted from several exchanges due to UST's collapse, it hasn't yet returned to all of them.

Despite this, several exchanges, such as Binance, KuCoin, Crypto.com, and eToro, still facilitate the trading of Luna 2.0 tokens.

Buying Luna 2.0 tokens on these exchanges involves registration, depositing funds, selecting an investment amount, and choosing a wallet to store the funds.

According to Mudrex CEO and Co-Founder Edul Patel, Luna 2.0's revival plan aims to make Terra more like a decentralised autonomous organisation (DAO). Patel notes that while the plans are in place and gaining support from Luna holders, it may take some time to materialise.

Sathvik Vishwanath, CEO and Co-Founder of Unocoin, believes that Luna's recent struggles were partially due to the governance structure of the Luna Foundation. Luna 2.0 seeks to decentralise governance and become a DAO, allowing for more global governance rather than just one organisation or foundation, Vishwanath added.

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Terra Luna 2.0 price today

Terra to USD chart

Terra Luna 2.0 price stands at £1.00 and has seen a 1.24% hike in the last 24 hours. The market cap for the coin is set at £259,343,209 with a fully diluted market cap of £1,006,958,588. Terra Luna 2.0's value stands at £26,669,196, down 10.23% in the last day alone. Currently, Luna 2.0 has a circulating supply of 258,198,184.

The graph for Terra Luna 2.0 shows that the coin's price is steadily increasing and predicted to go up in the coming days.

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tripti sarda

Author: Tripti Sarda

Spirituality, cats, and a love for pop culture. You will always find me talking about the mountains.

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