The crypto market witnessed a downturn in 2022 after its ups in late 2021. Terra Luna’s collapse has largely been one of the reasons for this.
The Terra Luna crash that occurred in May shook the crypto industry with many projects going down along with it. Terra co-founder, Do Kwon, wasn’t spared from the going down as well. The founder has been reportedly arrested for his part in this and several other issues pegged on him.
Talking about peg, the Terra Luna lost its peg and was de-pegged-there’s still been no official explanation as to why. Although there have been talks that it was an insider job, it is still considered hearsay.
What is Terra Luna?
Terra Luna is a token created to enable stablecoins to be created for decentralized finance (DeFi) applications. The project was founded by Terraform Labs which has Do-Kwon and Daniel Shin as its principals.
The token trades by the symbol LUNA in the crypto market. Like many other crypto assets, LUNA is used as a payment network. It is decentralized, meaning it has no central authority.
It is a stablecoin pegged to the US dollar or another local currency such as the South Korean Won and the Mongolian Tugrik. This stablecoin has a dual-token system managed by an algorithm. LUNA was the native token used to keep TerraUSD (UST) stable.
LUNA could be used to ‘mint’ new UST, and stabilize UST overall. On the other way, if it lost its peg and became worth more than $1 – TerraUSD could be redeemed for LUNA, to lower the price of UST.
LUNA Crash- What Happened?
Before its crash, Terra Luna was among the top 1 caused hyperinflation of the Terra (LUNA) supply cryptocurrencies by market capitalization. The stablecoin has lost its place and has seen some trading platforms suspending its trading.
Before its crash, critics labeled the project ”Ponzi scheme”. It was said that, unlike other successful stablecoins, LUNA/UST wasn’t properly backed by cash reserves.
What caused the crash is complicated and led to investors selling LUNA themselves in the panic and liquidations. UST was also dumped for LUNA which created a higher LUNA supply. This caused UST to lose 90% of its value with Terra Luna crashing seriously.
The algorithmic nature of the stablecoins led to hyperinflation of the Terra (LUNA) supply. It became less valuable as its circulating supply ran into trillions. It is important to know that the top cryptocurrency has a fixed supply of 21 million-this is one of the reasons it is seen as a valuable cryptocurrency.
Terra’s Worth in the Crypto Market Today
The Terra company had made move to rebrand the project with the creation of Terra Classic [LUNC]. LUNA which used to be among the top 10 crypto assets is currently ranked 98th according to CoinMarketCap.
The current price of Terra is $2.60 with a 24-hour trading volume of $184,962,152. The total market cap as of writing is $330 million. BTC currently has a total market cap of $370 billion while ETH, the second largest cryptocurrency stands at $160 billion. LUNA has a circulating supply of 127,475,474 LUNA coins.
Although exchanges like e.Toro and others have suspended the trading of LUNA, it can still be purchased on some platforms.
Can Terra Luna Survive Beyond 2022?
Terra has had it tough in the year 2022 which has been full of ups and downs for the crypto industry. Many projects have failed even though some are still building.
Terra launched the Terra Classic after the collapse of LUNA/UST but will the platform survive the year is a question that needs. This is coming when many industry critics are also questioning the future of digital currencies. Bitcoin, which is the largest and biggest cryptocurrency is not left out of this discourse.
Terra’s co-founder, Do Kwon, has also been in trouble recently. This isn’t good for the image of the project which has been tagged a ‘Ponzi Scheme‘. Nevertheless, just as critics have pointed out that LUNA isn’t backed by cash reserves but has large Bitcoin reserves, it might get back.
Investors have considered buying the dip despite the market downturn. Crypto investors such as Michael Saylor, Tyler, and Cameron Winklevoss have predicted that bitcoin could overtake gold as a store of value in the future.
Do Kwon’s situation and announcement by the Terra team would also tell if it will survive in the long run.
Should You Buy LUNA in 2022?
LUNA isn’t on the list of top crypto assets to invest in now. Crypto investment is the riskiest form of investment due to its volatility and LUNA is top on the riskiest list today.
Binance, the largest crypto exchange based on volume still displays risk warnings for buying LUNA on its website. This means that if you’re an averse risk taker and you believe the price would soar later, then you can buy.
If you are buying LUNA then you must put what you can afford to lose in the investment. This is because the return on investment is not guaranteed. Many investors who are not holding Terra are however selling.
Where to Sell Other Crypto Assets
If you are looking for where to sell your crypto assets due to the current status of the crypto market then you need a place where you can get a good rate.
Prestmit, a digital exchange platform in Nigeria is the best you can get around especially in this part of the world. You can sell top crypto assets such as BTC, LTC, DOGE, & USDT at good market rates here.
Payment options here include Nigerian Naira, Ghanaian Cedis, and Tether [USDT].
Conclusion
Terra is one of the most-troubled crypto projects which has seen it undervalued while its co-founder is in trouble. Many crypto projects have already crashed this year but the Terra team has been putting measures in place to make them survive. Time will however tell where its future lies in the coming months.
