• Wed. May 22nd, 2024

Luna Classic (LUNC) is the native coin of the original Terra blockchain network released in 2018. Following the collapse of the blockchain’s main stablecoin, TerraUSD (UST), the community voted to create a new blockchain. In May 2022, the native coin of the new blockchain, created by Terra’s founder Do Kwon’s proposal named Terra Ecosystem Revival Plan 2, took over the name LUNA, while the original blockchain coin was rebranded as LUNC.

Luna Classic (LUNC) History

Terra blockchain was launched in early 2018 in partnership with Do Kwon and Daniel Shin to develop an e-commerce application with a price stable cryptocurrency. The project, developed by a company called TerraForm Labs, raised $25 million in January 2021 and $150 million in July 2021. In the process, the company developed stablecoins that peg at the prices of different fiat currencies, introduced features to run smart contracts to the network, created tokenized stocks on the Mirror Protocol, and collaborated with other blockchains.

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While the coin, which was on the scene at the time as LUNA, was priced under $1 in early 2021, it gained notoriety and increased its value linearly as the use of powerful stablecoin products became more common. The price of $119.18 recorded on April 5, 2022 is LUNA’s ATH.

In the first months of 2022, a company called Luna Foundation Guard was formed to create a reserve for UST. The company has purchased $3.5 billion worth of cryptocurrencies, mostly BTC, to support stablecoins on the network.

The main reason why LUNA’s price increased so much was Anchor, one of Terra’s decentralized protocols. Anchor’s liquidity pools of stablecoins offered unsustainable rewards such as 20% annual APR. In April 2022, total deposits in Anchor approached $15 billion, while the circulating supply of old LUNA coins had fallen to less than 400 million coins.

Despite this, LUNA’s market cap was around $41 billion. Even with everything that’s going on around Terra Luna Classic, the LUNC is predicted to pick itself up and increase in value over time.

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Terra’s flagship UST was among the most used stablecoins in the market. On May 9, 2022, with the exploitation of the Anchor protocol, the price peg of UST began to deviate from $1. Although the price dropped to $0.30 in two days, it seemed to be recovering again, as the price went up to $0.84, succumbing to the selling pressure of those who did not trust the protocol and started the complete collapse. As of May 13, all crypto assets belonging to the Terra Luna blockchain became unrecoverable. This collapse had plunged LUNA into a hyperinflationary cycle.


Creation of the New Blockchain

Do Kwon, CEO of TerraForm Labs, promoted a hard fork of the Terra network in an effort to revive the network and compensate investors. There were no algorithmic stablecoins on the new blockchain.

The new LUNA coins to be created have been airdropped to the victims and Terra developers. 35% of the total supply was reserved for pre-attack LUNA owners, 10% for post-attack LUNA owners, 10% pre-attack UST owners, and 15% for post-attack UST owners. The pre-attack snapshot was taken on May 7, 2022, while the post-attack snapshot was taken on May 27, 2022.

Why Did the Network Collapse?

The original Terra blockchain’s stablecoin, UST, was an algorithmic stablecoin. In other words, it did not hold a reserve for minted tokens but tried to peg the price to 1 USD by minting or burning UST tokens according to complex encodings and supply and demand. Unfortunately, this system was vulnerable to attacks and was exploited with a strong attack, causing the network to crash.


Who is Do Kwon?

Do Kwon, a South Korean engineer, is the CEO of TerraForm Labs. Kwon, who was responsible for Luna and UST’s massive $45 billion collapse, moved to Singapore after the collapse. Everyone who was previously employed at TerraForm Labs and was working at the time of the collapse gave statements to the prosecutor’s office about the incident.

Do Kwon has been charged with violating South Korea’s Securities Market Law, and arrest warrants have been issued for five other people associated with him. It is not known whether Kwon is in Singapore or in another country, and in this process, he is contacted via Twitter.

“I am not “on the run” or anything like that – we are fully cooperating with any government agency interested in communicating and we have nothing to hide. We are in the process of defending ourselves in multiple jurisdictions – we have held ourselves to an extremely high bar of integrity and look forward to clarifying the truth in the next few months. Cheers 🥂.” he tweeted.

It is a matter of curiosity about what will be the fate of Do Kwon in the future and how the new LUNA will gain a place in the cryptocurrency market.

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Kevin Moore - E-Crypto News Editor

Kevin Moore - E-Crypto News Editor

Kevin Moore is the main author and editor for E-Crypto News.