Understanding Wrapped Luna
Wrapping your head around Wrapped Luna, or WLUNA, cryptocurrency could prove a profitable investment, so let's dive straight into it. WLUNA is a wrapped version of Luna cryptocurrency that belongs to the Terra ecosystem. But to fully understand what it is, we should first understand what a wrapped token means.
A wrapped token is a copy of a cryptocurrency on a blockchain separate from its native network and backed on a 1:1 basis. This is why a wrapped token's value is the same as its underlying native currencies. As such, wrapped coin holders can redeem them for the cryptocurrency they represent.
Speaking of the role wrapped tokens play in the crypto ecosystem, they increase interoperability between blockchains and are used to provide liquidity to a growing DeFi ecosystem.
Along similar lines, WLUNA is pegged to the value of Luna and has the same value as Luna.
Rebranded as WLUNC
As seen on CoinMarketCap, by April 2022, there were an increasing number of different addresses holding Wrapped LUNA as the token became widely available. At the time, WLUNA was trading at $116, the same as the Luna.
However, this was before the collapse of the Terra stablecoin and the subsequent crash of Luna in May 2022. After the collapse of the ecosystem, the Terra community voted to split the blockchain into two separate chains.
As such, the original chain was then rebranded as the Terra Classic network, which also led to the creation of a new LUNA Coin called LUNA Classic (LUNC). Its wrapped version was named Wrapped LUNA Classic (WLUNC).
Since WLUNC is tied to the value of Luna, it also suffered the same fate as the original cryptocurrency and lost 99.9% of its value. As of writing, WLUNC is trading at $0.00023.
How does it work?
Unlike Luna, WLUNA is minted on Ethereum and is an ERC-20 token. WLUNA basically represents Luna on the Ethereum blockchain. As for how it works, you freeze your original tokens and mint Wrapped LUNA tokens on Ethereum. This way, you can make your idle Luna tokens work by locking them up in DeFi protocols.
Being based on the Ethereum blockchain allows it to be used on Ethereum, which wasn't possible for Luna. This way, the holders of WLUNA tokens not only get to utilize the Terra ecosystem but also participate in the vast and thriving DeFi ecosystem of Ethereum.
WLUNA is designed to provide Luna holders with greater liquidity and flexibility in using their Luna tokens.
So, if you have an Ethereum wallet, you can store, lend or borrow your WLUNA token on the decentralized applications (Dapps) built on the second-largest cryptocurrency network.
To buy WLUNC, you can head over to Coinbase and Uniswap.
Author: Moni Talks
Moni Talks is a cryptocurrency trading exchange and social platform that is dedicated to the crypto community.