Terra (LUNA) is headed to walk on the difficult path post the collapse, particularly after sweeping the rubble. The foundation is looking to sort the pieces into a block to rebuild the protocol.
It is an opportune time for the regulators to look for a comprehensive stablecoin regulation, while the blockchain is in mea culpa followed by introspective solutions.
On Terra’s governance proposal portal, 80 per cent of eligible token holders that voted are pushing to rebuild the protocol, minus the algorithmic component.
For those unaware of the biggest debacle in recent history, Terra’s native token LUNA wiped out more than $30 billion from investors’ kitty as token plunged to merely a fraction of cents from more than $90 in just a few hours.
The depegging of Terra’s stablecoin TerraUSD (UST) hit its sister concern, Luna, brutally. This led to the halting of the Terra blockchain after big investors started dumping millions of dollars worth of UST.
Terra’s investors have plenty of incentive to support this. Though, the losses from their gamble on the protocol are astronomical. So, what happens when the rubble is cleared?
Answering this, Edul Patel, CEO and co-founder, Mudrex, said that it means, “We would see a hard fork, which is a permanent change, creating a chain split.”
“The existing chain would be known as Terra Classic with its token Luna Classic, whereas the new chain will be known as Luna, he added.” “The circulating supply of LUNA would reduce to 1 billion.”
After this huge debacle, it is not easy for the foundation to restart everything. It may take some time for Terra to get back on track. But one thing is clear that the golden old days are a part of history now.
“Moreover, hoping that forking would magically add value to the protocol is wishful thinking. It does not happen that way.”
Hence, the Terra team will have an uphill battle trying to bring back Terra’s glory.
On Monday, Terra’s Luna rallied more than 40 per cent to hit $0.0002165, with a market cap of more than $1.3 billion, according to the coinmarketcap data. The trading volumes of the token more than doubled in the last 24 hours, said data.
Vikram Subburaj, CEO, Giottus Crypto Platform, said that Terra’s proposal to rebuild its protocol and ensure LUNA is decoupled from UST is an attempt to give hope to the developers and the community that the blockchain ecosystem has built over the years.
“More than $30 billion value was locked in the Terra ecosystem before it began its slide – even if a share of that comes back, it will still be a viable project,” he added.
Barring a handful of hopeful investors, others continue to look at the project with suspicion. New protocol is an attempt to build a set of products and learn from its previous mistakes.
“Crypto markets can be forgiving – Cardano (ADA) lost more than 95% of value over 2018-2020 before it registered new all-time highs,” said Subbarao. “We hope they build a responsible and accountable ecosystem in their second journey.”Market players believe that whatever happened with the US was unfortunate, but majority of the token holders are still hopeful on the protocol. But is it the end of a mistakenly taken road? Perhaps not. They believe this as well.
An organisation which has integrity and core values intact can rise from ashes for sure, said Raghav, Founder, EquiDEI, if they can learn from the mistakes committed in the past.