The Misleading Luna 2.0 And Why You Should Exercise Caution.
It seems that Terra and Do Kwon are not letting go yet despite their massive failure.
Terra which is now rebranded as Terra Classic without a doubt had tried to address one of the biggest issues faced by DeFi. There no denying that decentralised finance needs decentralise money. Terra tried and unfortunately failed spectacularly. Many got hard for this event and while the dust is yet to be settled, a new Terra 2.0 is introduced with the notion of an airdrop which is free coins. But with a simple step back, there is no airdrop nor free money here. I would recommend reading my previous article about the Terra’UST meltdown first to better understand what is happening here.
Is Terra 2.0 trash?
To answer this question, analyse what happened. Terra built a blockchain from the ground up to introduce a product UST an algorithmic stablecoin and it failed sadly. That means Terra is dead. But accepting this would mean goodbye for Do Kwon and the entire ecosystem built around Terra. Although Terra had one of the most beautiful applications the likes of Mirror Protocol and Chai, none of them was unique own their use case. So the idea now to stay in business is to fork/recreate the chain and rename the previous chain to Terra Classic and its tokens to Lunc, and USTC respectively. The new chain will bear the Terra 2.0 name with a token called Luna but the funny part is this new Terra won’t have a stablecoin. Things are getting creepy now. Terra shifts its whole goal which was building decentralised money in a short period of time to simply become another layer 1. But the fact that Terra 2.0 doesn’t have anything special to add to the market combined with the recent negative marketing of UST, the odds are not in their favour.
There is a saying that this Ethereum version is a forked chain and the original chain is Ethereum Classic. But remember that the cause of Ethereum’s fork is totally different from Terra’s fork. Ethereum did not fail on its original goal which is to become a decentralise computer that hosts decentralise applications. The fork occurred due to a disagreement on how to handle the infamous DAO hack in 2016. With the majority of the community in favour of returning the funds to the victims, the chain was rewritten and the hack never happened in the new chain. Terra, on the other hand, is a completely different story. They failed on their initial goal and fork the chain to exclude what made them known in the first place.
There is no airdrop here
Actually, if you are excited about this and think this is an airdrop, you literally need to work on your definition of an airdrop.
An airdrop, in the cryptocurrency business, is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a new virtual currency. _Investopedia
Airdrops are free money given to a community but in the case of Terra, there is no free money because basically, all they did is airdropping a bunch of newly minted luna to those who held Lunc and USTC before the de-pegging occurred. But the thing is anyone who held either of that two, lost way more money than the amount airdropped to them plus the new luna will be vested over 2 years with a 6-month cliff. You can argue that a post-de-pegging snapshot has been taken but chances are, anyone who speculated on Luna during the meltdown sees their money too, turn to basically zero. No one is making gains in this “airdrop” so call it whatever you like but no free money.
My thoughts about Terra 2.0
It is pretty much clear to me that Terra 2.0 is a lost cause and I am saying this as someone who believed and still believes in the idea that DeFi needs decentralised money. But that is not unfortunately UST. As CZ said in a recent tweet, “Forking the chain doesn’t give any value to the new chain”. So if you haven’t invested in luna you are better off not doing so and if you happened to lose money and get the new luna, what you do with it is up to you. Either sell them and move on or leave them and hope for the best. My fingers are crossed for you if your going for the latter.
Thanks for Reading!
I am not in any shape form a financial adviser and none of this is financial advice. It is only for educational purposes.
