πŸ“–
Web3 Encyclopedia
  • Welcome aboard!
  • Source
  • πŸ˜€Evolution from Web 1.0 to Web 3.0
    • Web 1.0 Web 2.0 Web 3.0
    • Key Features
    • Current Limitations
    • Future of Web 3.0
    • Learn: What Is Web3?
    • Learn: Will Every Brand Have a Web3 Strategy?
    • Learn: Big Ideas in 2023
    • Learn: The Web3 Paradox: Why Scaling Usage Alone Won't Lead to Mass Adoption?
    • Learn: Is Web3 A Marketing Buzz or Tech Revolution?
    • Learn: What is the relationship between blockchain and Web3?
    • Learn:Empowering Women in Web 3.0: The Role and Contributions of Women in Blockchain, DeFi, and dApp
    • Learn: Web 3.0 and the Future of E-Commerce
    • Learn: 12 ways ecosystem projects can attract more developers
    • Learn: How Web3 is Impacting Education?
    • Learn: Web3 And The Future Of Digital Advertising
    • Learn: Web3’s impact on personalization, trust and engagement
    • Learn: Web3-Powered Identity Management -- Unlocking the Benefits of Decentralization
    • Learn: Why Web2 companies fail in Web3 while others made it?
    • Learn: To Identify or Not in a Web3 World?
    • 🀫[Insider Series] McKinsey x Web3
    • TL;DR πŸ‘€
  • πŸ’²Blockchain Fundamentals
    • Why is Blockchain So Popular?
    • Introduction to Blockchain
    • Blockchain Misconceptions
    • Blockchain vs Bitcoin, Database, Cloud
    • Consensus Mechanism
    • Public and Private Keys
    • Hash Functions and Cryptography
    • Sharding
    • Types of Blockchains: PoW, PoS and Private
    • Understanding Cryptocurrency
    • Coins vs Tokens
    • Blockchain Trilemma
    • Legality
    • Learn : Google’s Cloud Based Blockchain Node Service
    • Learn: How Blockchain, Digital assets, and Web3 Unlock Financial Inclusion Globally
    • Learn: Will Chinese-Made Crypto Soar Higher?
    • Learn: What Does MiCA Mean for Crypto in Europe?
    • Learn: Unraveling the Intricacies of Blockchain Forensics and Asset Tracking
    • Learn: Promising blockchain use cases in healthcare industry
    • Learn: The Role of Blockchain in Authenticating and Provenance Art
    • Learn: Blockchain-Based Digital Identity: Benefits, Risks, and Implementation Challenges
    • Learn: The Future of Energy Supply Chains
    • Learn: Revolutionizing smart contracts and cryptocurrency
    • Learn: Nigeria goes blockchain
    • Learn: A Game Changer for Online Gaming?
    • Learn: Is blockchain technology ready for high-storage applications?
    • Learn: Will Blockchain Technology Mark a Turning Point in Fraud Prevention?
    • Learn: Why ZK-rollups need data availability?
    • Learn: How will generative AI disrupt blockchain?
    • Learn: A New Blockchain for Generative AI?
    • TL;DR πŸ‘€
  • 🏟️Web3 Utilities
    • Decentralized Applications (dApps)
    • Cross-chain Bridges
    • DAO
    • Artificial Intelligence
    • Learn: Is Community-building Essential for Web3 Startups?
    • Learn: β€˜Decentralization Theater’
    • Learn: Crypto and AI- A yay or nay combination?
    • Learn: Dissecting the DAO
    • Learn: What is motivating Lido DAO to rise?
    • Learn: How to Turn Your Community Into a DAO?
    • Learn: The Key to Decentralized Decision Making
    • Learn: How Web 3.0 can disrupt the supply chain industry?
    • TL;DR πŸ‘€
  • πŸͺ™Bitcoin
    • What is Bitcoin
    • Bitcoin's Blockchain Technology
    • UTXO Model and Transaction Fees
    • Bitcoin Mining and Mempool
    • Learn: What is bitcoin mining?
    • What are Hard Forks and Soft Forks
    • What is SegWit and the Lightning Network
    • Bitcoin Ecosystem
    • Can Bitcoin be Destroyed? Game Theory and Network Attacks
    • Learn: Crypto token supplies explained
    • Learn: What is crypto tax-loss harvesting, and how does it work?
    • Learn: Can Crypto Go Green? How to Invest in Eco-Friendly Cryptocurrencies
    • Learn: Why Did FTX Collapse? Here’s What to Know.
    • Learn: How Sam Bankman-Fried swindled $8 billion in customer money?
    • Learn: How much is Bitcoin worth today?
    • Learn: The Costs of Running a Bitcoin Node In Nigeria
    • Learn: Has 2022 Left Any Crypto Positives?
    • Learn: How Crypto Exchanges Can Be Free of Risk?
    • Learn: Greed, Lies and FTX: Is Crypto a Force for Good or Evil?
    • Learn: Is Crypto a Cultural Movement?
    • Learn: What are the consequences of crypto’s ongoing regulatory process?
    • Learn: Beyond the Crash and Embracing NFTs?
    • Learn: Understanding crypto bag holders and their mindset
    • Learn: Inscriptions: Just A Fad, Or A Real Threat To Bitcoin Becoming Decentralized Money?
    • Learn: How Bitcoin Ordinals Can Change the Future Of Mining?
    • Learn: What is a supernet?
    • Learn: Bitcoin Miners Celebrate 10 Years Since First ASIC, What Changed Since Then?
    • Learn: Bill Vs. CBDC – Why This US Congressman Wants To Block The Fed From Issuing A Digital Dollar?
    • Learn: Why Bitcoin Will Blow People’s Minds In 2025?
    • Learn: How the Howey Test Sheds Light on Cryptocurrency's Regulatory Gray Area
    • Learn: Cryptocurrency vs AI: A Complex Debate
    • Learn: Where the U.S. Government Went Wrong in Regulating Crypto?
    • Learn: The Nostr Privacy Paradox
    • Learn: Do algorithmic stablecoins have a future as centralized coins are under scrutiny?
    • Learn: Is Bitcoin Set To Revolutionize The Financial World With Its Superior Purchasing Power?
    • Learn: What is Shibarium, and what does it mean for Shiba Inu?
    • Learn: What is a crypto dusting attack?
    • Learn: Is the Adoption of Central Bank Digital Currencies (CBDCs) the Future?
    • Learn: How Artificial Intelligence Could Revolutionize Crypto?
    • Learn: What’s next for EU’s crypto industry as European Parliament passes MiCA?
    • Learn: Why the EU Has MiCA and the U.S. Has Securities Law Confusion?
    • Learn: Six New Projects Looking to Mitigate Bitcoin Mining’s Energy Footprint
    • Learn: Who on Crypto Twitter chose not to pay for a blue checkmark?
    • Learn: What is the wash-sale rule in Crypto?
    • Learn: What is Pepecoin and can it flip memecoins Dogecoin and Shiba Inu?
    • Learn: Can you recover stolen Bitcoin from crypto scams?
    • Learn: What the β€˜anti-mining bill’ means for the crypto industry in Texas?
    • Learn: Does the US have a crypto β€˜tax loophole’ problem?
    • Learn: How users can stay protected?
    • Learn: How Crypto Revolutionize Cheaper and Faster Transactions?
    • Learn: Can NFTs and CFDs be BFFs?
    • Learn: A PR expert’s tips for memecoin projects
    • Learn: Why politicians aren't convinced about the Digital Euro?
    • Learn: How A 90-Year Old TA Theory Predicted The Sudden Bitcoin Boom?
    • Learn: Social Trading Platforms and CFDs: A New Paradigm in Investment
    • Learn: How could the Chinese economic crisis impact Bitcoin and crypto?
    • Learn: How do they compare: Bitcoin IRA vs. traditional IRA?
    • Learn: Why Tokenized Assets Are Safer During a Banking Crisis?
    • TL;DR πŸ‘€
  • πŸ›’οΈEthereum
    • Bitcoin vs Ethereum
    • What can Ethereum do?
    • What is Ether (ETH)?
    • What's Unique About ETH?
    • What are Smart Contracts?
    • Energy Consumption?
    • Ethereum Virtual Machine (EVM)
    • Pros & Cons of Smart Contracts
    • Decentralized Applications (dApps)
    • Ethereum Token Standards (ERC-20, ERC-721 and ERC-1155)
    • Evolution of Ethereum
    • How to Get Your First Ethereum
    • Learn: Next Ethereum Upgrade β€” Shanghai Upgrade
    • Learn: Tipping Scale for Crypto Adoption: Usability vs. Accessibility
    • Learn: Major Publicly Traded U.S. Bitcoin Miner Files For Chapter 11 – Impact On The Market?
    • Learn: 5 altcoin projects that made a real difference in 2022
    • Learn: How Tether Can Be a More Stable Stablecoin?
    • Learn: Are the Ethereum Killers Still Deadly?
    • Learn: What Ethereum Tech Trends Are Weathering the Bear Market?
    • Learn: How Ethereum’s token burns are making it a deflationary cryptocurrency?
    • Learn: A few things to know about Ethereum's Shanghai Upgrade
    • Learn: The Role of Enterprise Ethereum
    • Learn: Understanding Layer 2 Scaling Solutions for the Ethereum Network
    • Learn: The Battle of Giants: Bitcoin vs Ethereum
    • Learn: Cryptography, Smart Contracts and Distributed Networks
    • Learn: The Memecoin Grift and How It Threatens Ethereum Culture
    • Learn: What Is Ethereum’s β€˜Data Availability' Problem, and Why Does It Matter?
    • TL;DR πŸ‘€
  • πŸ‘›Wallet
    • What is a Blockchain Wallet?
    • Hardware / Software Wallet
    • How to Get Your First Cryptocurrency
    • Setting up Metamask Wallet
    • Learn: How to connect the Avalanche network to MetaMask?
    • Learn: How to pass on your crypto when you die?
    • Learn: What are hierarchical deterministic (HD) crypto wallets?
    • Learn: Pros and Cons of Digital Wallets
    • Learn : How Web 3.0 Wallets Are Redefining Digital Asset Security?
    • Learn: Open source: Buzzword or real security for crypto wallets?
    • TL;DR πŸ‘€
  • πŸŒ•New & Rising Protocols
    • Binance
    • NEAR
    • Solana
    • Fantom
    • Polygon
    • Cardano
    • Polkadot
    • Cosmos
    • Harmony
    • Cronos
    • Optimism
    • Terra
    • Who Will Win the L1 Wars?
    • Learn: New Layer 1 Blockchains Are Expanding the DeFi Ecosystem But No Eth Killers Yet
    • Learn: Is an Increased Focus on Layer-2 Scaling and ZK Technology Justified?
    • Learn: What Are the Stakes in the SEC vs. Ripple Case?
    • Learn: What is The Graph, and how does it work?
    • TL;DR πŸ‘€
  • πŸ“ˆDecentralized Finance (DeFi)
    • CEX vs DEX
    • CeFi vs DeFi
    • Algorithmic Stablecoins
    • Airdrop
    • Liquidity Pool
    • Impermanent Loss
    • Swapping
    • Wrapped Token
    • Arbitrage Opportunities
    • Staking
    • Yield Farming
    • Total Value Locked (TVL)
    • Gas Fees
    • Lending & Borrowing
    • Useful Tools
    • Activity: Uniswap & Pancake Swap
    • Learn: Automated Market Makers (AMMs) in DeFi
    • Learn: Crypto Moving towards ESG: What Is Regenerative Finance (ReFi)
    • Learn: What Is dYdX? Understanding the Decentralized Crypto Exchange
    • Learn: It's A Wrap - DeFi in 2022
    • Learn: Why DeFi should expect more hacks this year?
    • Learn: The Security Challenges of DeFi
    • Learn: The Promising Future of Decentralized Social Media on Web 3.0
    • Learn: Can CBDCs, Tokenized Deposits, Stablecoins and DeFi Coexist?
    • Learn: The Increasing Popularity of DeFi and Its Potential to Disrupt Traditional Finance
    • Learn: The future of DeFi is ReFi
    • Learn: DeFi aggregation
    • TL;DR πŸ‘€
  • πŸ™ˆNon-Fungible Token (NFT)
    • What are NFTs?
    • Case Study
    • Storage
    • Who are the Players?
    • NFT Marketplace
    • NFT Useful Resources
    • Activity: Mint Your Own NFT
    • Learn: How You Can Prevent Hackers From Stealing Your NFTs?
    • Learn: What Is an NFT Floor Price?
    • Learn: Should Bored Ape buyers be legally entitled to refunds?
    • Learn: China’s view of NFTs different from rest of the world’s
    • Learn: NFTs IRL: How Digital Collectibles Are Forging Offline Experiences
    • Learn: How NFT Brands Can Cut Through The Noise
    • Learn: How Web3 disrupts the music sector?
    • Learn: Unlockable content in NFTs
    • Learn: Why Meta Matters in NFTs?
    • Learn: Should NFT Marketplaces Become Centralized?
    • Learn: HermΓ¨s vs. MetaBirkins: The NFT Case That Could Have Major Trademark and Artistic Consequence
    • Learn: What are phygital NFTs, and how do they work?
    • Learn: What is NFT ticketing and how does it work?
    • Learn: Why Solana NFT marketplace is seeing less active users?
    • Learn: NFTs and Intellectual Property
    • Learn: How AI Is Changing Artistic Creation and Challenging IP Laws?
    • Learn: The Future of NFTs: Exploring Dynamic NFTs and Their Versatile Use Cases
    • Learn: NFTs in the event and ticketing industry
    • Learn: What is NFT rarity, and how to calculate it?
    • Learn: What happens to your NFTs when you die?
    • Learn: Dogecoin-Like Spike in Milady NFTs After Elon Musk’s Tweet, But Will It Last?
    • Learn: What are NFT royalties, and how do they work?
    • Learn: How developers aim to store crypto inside NFTs?
    • Learn: Generative Art NFTs: What Are They & Why Are They So Popular?
    • TL;DR πŸ‘€
  • πŸ’—Metaverse
    • What is the Metaverse?
    • Metaverse Economy
    • Metaverse Companies
    • GameFi
    • Learn: Are We in the Metaverse Yet?
    • Learn: Can the Metaverse exist without blockchain?
    • Learn: Can the Metaverse Facilitate Sustainable Growth of Defi Systems?
    • Learn: What is the role of biometrics in the metaverse?
    • Learn: Can metaverse be the future court?
    • Learn: Metaverse Fashion Is on the Rise, but for Whom?
    • Learn: Sustainability in the Metaverse: Challenges and Opportunities
    • Learn: How To Build A Responsible Metaverse?
    • Learn: What is a VTuber, and how do you become one?
    • Learn: How proof-of-identity provides human experiences?
    • Learn: The β€œMetaverse” Next Frontier for Business: Impact And Challenges
    • Learn: The 5 Biggest Misconceptions About The Metaverse
    • Learn: Why culture and ownership are critical to the metaverse?
    • TL;DR πŸ‘€
  • πŸ‘ΎCareer in Web3 (coming soon)
    • Developers
    • Moderators
    • Community Managers
    • UI/ UX Designers
    • Digital Fashion Designers
  • 🌱Sustainability (Coming Soon)
    • Industry Effort
    • Co-author
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On this page
  • Terra (LUNA): an introduction
  • How Terra Works
  • What is Terra Luna Classic (LUNC)?
  • What is Terra Luna 2.0?
  • How does Terra 2.0 work?
  • Terra Luna Crash 2.0
  • Speculations: What happened To Terra Luna?
  • The impact of the Terra Luna crash
  1. New & Rising Protocols

Terra

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Last updated 2 years ago

Terra (LUNA): an introduction

Terra (LUNA) is a cryptocurrency that was launched by the in July 2019. The LUNA token is the native token of Terra, a blockchain that was developed by a Korean-based firm known as Terraform labs. The token which was formerly known as LUNA is now known as Terra Luna Classic (LUNC).

How Terra Works

The way it works is that before you buy UST, you have to mint some LUNA. You pay the going rate in LUNA and the LUNA tokens are burnt. The supply of LUNA is reduced and the price goes up (with demand). On the other hand, if you want to mint LUNA, you convert UST coins. The stablecoins are burnt and the price of UST goes up.

In addition, LUNA could be staked for additional rewards. Apart from the profit that LUNA gave its holders, it enabled them to create and vote on different proposals with changes regarding the Terra protocol. LUNA also served as a regulatory mechanism for the demand of stablecoins that are pegged to the token.

What is Terra Luna Classic (LUNC)?

LUNA Classic (LUNC) is the original Terra LUNA coin left behind after the recent UST/Luna collapse and the establishment of a new Terra chain. Kwon's plan for recovery included the creation of a whole new chain on which future transactions would be conducted. The old chain was split into the LUNA Classic and the Terra chains. Terra is the name of the new chain (known as LUNA 2.0), and LUNA Classic (LUNC) is the original Terra blockchain's native token.

What is Terra Luna 2.0?

Terra 2.0's policy occasionally issues additional LUNA tokens to crypto investors who purchased more than 10,000 LUNA before the catastrophic harm to this stablecoin. More than 300% of crypto investors' LUNA tokens will be unlocked at once, with the remaining 70% issued over two years. These crypto investors will receive the new Terra 2.0 tokens after six months.

How does Terra 2.0 work?

By delegating LUNA 2.0 tokens to a validator of their choice, LUNA 2.0 token holders participate in consensus. Validators, like delegates, frequently put up their own stake. Therefore, before awarding prizes to delegators, the validation node keeps a commission in this scheme.

The incentives generated by LUNA 2.0 delegators differ, depending on the voting power of the validators. That being said, those with more voting power naturally earn more rewards, but they must be dispersed among a wider pool of delegators.

Terra Luna Crash 2.0

Speculations: What happened To Terra Luna?

The impact of the Terra Luna crash

Source

The asset is now famous for the crypto crash that occurred in May of 2022: the token which sold as high as $80 per LUNA is now currently $0.0001074 per LUNC on as of the 20th of July 2022.

was built with the intention of offering users the stability of fiat currencies while harnessing the power of blockchain technology for settlements that were faster and cheaper than regular payment solutions. LUNC was widely accepted because it was backed by its algorithmic stablecoin sister token which is known as the Terra Classic USD (UST). In December 2021, Terra overtook the BNB Chain to become the second largest DeFi protocol with more than $20 billion invested in the network across its applications. At some point, LUNA sold for over $100 until the May crash that shook the world of cryptocurrency, leaving many in heavy financial losses.

that powers a group of algorithmic stablecoins which were designed to maintain their pegs with the LUNA token. One of these algorithmic stablecoins is UST, which maintained its peg to the US Dollar through a network of investors that buy LUND (formerly LUNA).

The profits from the variation in prices of the LUNA and its sister token UST goes to the arbitrageurs on the Terra network. Apart from helping the maintain UST peg to the US dollar, of being the payment method used for transaction fees in the Terra network's gas system.

The term 'classic' is most likely a reference that occurred after Ethereum's 2017 breach. This appears to be another ploy to promote the UST crash as 'Terra's DAO hack moment', as Kwon stated.

An algorithmic stablecoin is an asset that derives value through a set of rules rather than being tied to an asset, itself. This method enabled Terra users to without needing to hold their physical counterparts.

However, the so-called stablecoin UST depegged on May 9th, after nearly 18 months of retaining its value against the US dollar. The uncoupling created a chain reaction that resulted in , as well as Bitcoin and the greater crypto sector, which has yet to recover fully.

Terra 2.0 is the most recent version of Terra (LUNA), which is what . The goal is to propose a fork of the Terra blockchain and an airdrop to crypto investors whom the recent market downturn has impacted. The main goal is to restore trust in this stablecoin through the Terra ecosystem's new venture.

Terra 2.0 uses a typical to validate transactions. A total of 130 validators engage in network consensus at any given moment, with voting privileges determined by the quantity of LUNA 2.0 connected to each node. Gas fees and a 7% fixed yearly LUNA 2.0 inflation rate are used to produce rewards.

Delegating can be done using the Terra Station interface, but be warned that it comes with a risk. For instance, validators can be penalized for misbehaving, resulting in staked LUNA 2.0 being sliced. even if the validators are mistakenly turned off for a brief time.

Terra Luna Classic would crash again, although this time with less effect. The UST burn didn't prove to be completely effective in getting the token back to $1, so Do Kwon . Terra Luna would have a new version known as Terra Luna 2.0 (LUNA) while the old version would be known as Terra Luna Classic (LUNC). A LUNA airdrop would also be conducted to reward old holders. Terra Luna 2.0 launched on the 28th of May 2022 and recorded falls in price over the next few days. at a price of $19.53 and subsequently collapsed to about $4.39 some hours later. In May, the price bounced back to $5.90 but with a consequent loss of trust in Terra Luna.

Terra Luna, as of June 2022, dropped significantly to $3.30 from a high of $4.50. According to a , there were indications that the token could go as low as $1.20 if it printed a sustained four-hour candlestick close below the $3.30 level. This analysis was based on a Fibonacci retracement indicator. The analysis turned out to be close to the truth; on the 22nd of July 2022, the LUNA was at $1.93 per token on CoinMarketCap. This is a significant loss for a token that once sold for almost $20. Investors lost trust in the token and sold their airdrops, even at low rates. There were many speculations about the crash and fewer people were willing to put their money in LUNA and LUNC.

There are so many speculations about how Terra crashed, but one major speculation is that there were of UST. Going by that theory, in early May there were some large UST withdrawals on the Terra ecosystem. These withdrawals increased the supply and brought the price of UST down. As the price of UST lowered, investors panicked and began to sell. As UST was sold, LUNA was minted and the price of the token fell drastically. LUNA was constantly being produced to keep UST steady in price, but in the long run, both tokens crashed.

The Terra Luna crash shook the crypto industry: many lost their life savings and there and hiding from their friends whom they convinced to invest in LUNA. Investors saw their money move from thousands of dollars to a few cents in the space of a few days. LUNA had a value of over $40 billion, but today that value has been wiped out, along with its investors' trust. More than against Do Kwon, and the US Securities and Exchange Commission (SEC) opened its own investigation into the matter. In South Korea, the investigation of Terra Luna's collapse is being led by a special financial crimes unit with the prosecutor's office in Seoul. Former employees of Terraform Labs in South Korea are banned from leaving the country during these investigations.

The Terra Luna crash was a in the world of cryptocurrency: it drove home the point that cryptocurrency in any form could always be volatile. Investors who believed in the ability of UST to remain pegged to the US dollar lost faith in UST and became more wary of Tether USDT. The suspicion that not all stablecoins are actually backed by reserves resulted in less trust for cryptocurrency stablecoins and tokens in general. Cryptocurrency critics had a field day, describing cryptocurrency as a Ponzi scheme in which investors had been played, not once, but twice with Terra Luna. The cryptocurrency industry as a whole suffered, losing investors and over $400 billion in value in terms of crypto market capitalization.

πŸŒ•
CoinMarketCap
Terra as a platform
Terra is a Cosmos-based protocol
Terra Luna serves the key function
to the hard fork of Ethereum and Ethereum Classic
decentralized automated organization (DAO)
invest in the price of these coins linked
the crash of UST and the Terra (LUNA) cryptocurrency
Do Kwon has devised as a regeneration strategy
proof-of-stake (PoS) consensus mechanism
Slashing can happen
announced a new plan
LUNA reached its peak
FX Street report
valued
massive sellouts
were reports that some investors were suicidal
2,000 investors filed a class action lawsuit
defining moment
Hacknoon
Cointelegraph
Terra community