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Terra isn’t dead: the network is back up and running on a new blockchain, focusing on a more decentralized governance model.
The community is making no attempts to revive its recently failed TerraUSD (UST) stablecoin. It has, however, re-launched a new version of the LUNA governance token, restarting its supply at 1,000,000,000 tokens.
Here are the facts on the new blockchain, the reasons for its launch, and the new token’s airdrop/ distribution.
Background on Terra 2.0
Terra 2.0 (now known formally as “Terra”) is a response to the collapse of the former Terra token economy. The previous blockchain’s UST stablecoin was short attacked, causing its price to deviate significantly below its dollar peg.
In turn, this destroyed the value of the LUNA governance token. The stablecoin’s stabilization mechanism depended on minting new LUNA to burn UST whenever the value of the latter declined.
However, the extremity of UST’s deviation in May caused an overwhelming amount of LUNA to enter circulation. What followed was a hyperinflationary death spiral for the token, moving from a top ten cryptocurrency to absolute worthlessness.
Under pressure and ridicule from the community following failed peg-recovery attempts, co-founder Do Kwon forfeited saving the blockchain. Rather, to preserve the community, he proposed restarting the Terra blockchain with a new cryptocurrency.
The proposal would reclassify the new chain and token as “Terra,” and “LUNA” respectively. Meanwhile, the old chain and token would be renamed “Terra Classic” and “LUNC” (LUNA Classic). When the vote closed on Wednesday, the Terra community voted overwhelmingly in favor of the move.
The LUNA 2.0 Airdrop
Early on Saturday, Terra announced that the first block of the revived blockchain had been produced at 06:00 AM UTC.
“Those who were eligible for the LUNA airdrop can view their wallet balances on the new chain by selecting the “mainnet” network in their Terra Station browser extension,” they added.
Just who was eligible for this airdrop? Not Terraform Labs (TFL) according to Do Kwon’s proposal, which explicitly removed the organization’s address from the airdrop whitelist. Rather, nearly all LUNA was distributed to harmed UST and LUNC investors, prioritizing maximal community ownership.
Specifically, the cryptocurrency’s distribution was based on “pre-attack” (block 7544910) and “post-attack” (block 7790000) snapshots of Terra Classic. The issuance of the one billion tokens:
- 30% to the community pool (for funding Terra ecosystem development)
- 35% to pre-attack LUNC holders
- 10% to pre-attack UST holders
- 10% to post-attack LUNC holders
- 15% to post-attack UST holders
Note: Unfortunately, LUNC bridged to other chains could not be accounted for in in the LUNA airdrop distribution.
Token holders can use LUNA for staking to their preferred validators, earning regards, and voting on governance proposals.
How to Get LUNA 2.0
If you weren’t eligible for the initial airdrop, don’t fret! There are a number of exchanges already supporting LUNA deposits, and will soon allow users to buy the token from the market. Many exchanges also participated in airdropping LUNA to LUNC and UST holders that held their balances at the exchange.
According to Do Kwon’s Twitter, the exchanges that have announced support for LUNA (sometimes called (LUNA 2.0) include:
At the time of writing, Bybit, Kucoin, Bitrue, gate.io, OKX, and Kraken have already listed the token.
According to CoinMarketCap, the coin peaked as high as $19.53 shortly after the new chain’s launch. However, it has since quickly fallen to $5.29.