After the fall of Terra Luna and the collapse of the entire Terra ecosystem, Do Kwon took to Twitter on Saturday to introduce a hard fork with Luna V2. He expected to provide some relief to the crowd by announcing this new project.<\/p>\n
But the crowd has chosen to burn their LUNA instead.<\/p>\n
With the burning mechanism, LUNA holders hope to bring the token’s value back from its hyperinflationary cycle and salvage some part of their investment. So far, 280 million LUNA tokens have been burned, far from being even a drop of the current LUNA Supply of 6.9 trillion.<\/p>\n
TerraUSD is an algorithmic Stablecoin. It is not to be confused with TetherUSD Stablecoin, which maintains a 1:1 peg with USD, backed by fiat currencies.<\/p>\n
Terra USD, on the other hand, is an algorithmic Stablecoin. Instead of being backed by fiat currencies, TERRA is linked to USD using “Game Theory”.<\/p>\n
Due to the current conditions, many crypto experts have given this theory a new title: Ponzinomics.<\/strong> Its value was supposed to be stable in the wildly volatile crypto market, partly because it was supposed to maintain a steady and modest supply to stay pegged.<\/p>\n Terra’s satellite asset is LUNA, which acts as a traditional cryptocurrency – fluctuating as per the whims of the market sentiments. The deal was that Terra would maintain a 1:1 ratio with the US dollar as long as LUNA had value.<\/p>\n And the bullish market of LUNA kept it stable until the start of May 2022.<\/p>\n Once the customers started to withdraw their ample profits – something this algorithm couldn’t keep up with.<\/p>\n It destabilized the algorithmic Stablecoin.<\/p>\n In a panic, the LFG – Luna Foundation Guard – were forced to sell their billions worth of Bitcoin reserves to maintain the value of Stablecoin. That aggressive sell-off resulted in the Bitcoin price dropping. And since most cryptocurrencies follow Bitcoin’s price trajectory, their prices also took a tumble.<\/p>\n Now the entire crypto market is in crash mode.<\/p>\n Another factor that aggravated LUNA’s steep descent was the Anchor protocol decreasing the yields. It caused the community to mistrust the cryptocurrency and put the coin in a death spiral.<\/p>\n At the start of May 2022, LUNA was priced at $86. It has now declined to $0.000158 – a massive 99.9% price drop that erased $280 billion worth of cryptocurrency investments.<\/p>\n Buy LUNA<\/strong><\/span><\/a><\/span><\/p>\n LUNA is currently a high-risk asset, invest wisely<\/em><\/p>\n Since the fall of LUNA, the Terra Labs founder has been working towards hard forking the project, which would result in a newer blockchain – creating a permanent divergence from the current Terra blockchain.<\/p>\n With a Hard fork, Do Kwon proposed forking the old Terra chain into a new one that will exclude the Stablecoin TerraUSD.<\/p>\n After proposing the forking on Twitter, he instead experienced backlash from the community wanting to remove the token from the circulation instead.<\/p>\n The announcement has attracted criticism from several high-profile crypto players, the CEO of Binance included.<\/p>\n In his tweet, he stated that “Forking doesn’t give a new fork any value. That’s wishful thinking to salvage the token.”<\/p>\n Personal opinion. NFA. <\/p>\n This won't work. Where is all the BTC that was supposed to be used as reserves? https:\/\/t.co\/9pvLOTlCYf<\/a><\/p>\n — CZ 🔶 BNB (@cz_binance) May 14, 2022<\/a><\/p><\/blockquote>\nHard Forking LUNA: An Approach to Salvage the Cryptocurrency<\/strong><\/h2>\n
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– forking does not give the new fork any value. That's wishful thinking.
– one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).<\/p>\n