As per Bloomberg’s most recent Tweet, specialists are pessimistic about the future of the Luna 2.0 Token, which has plummeted more than 50% over the past week
The hits have been coming because the backers of the failing Terra blockchain created a new digital token to recompense investors who were burned by one of crypto’s greatest disasters.
Despite the outcry from the Terra community on social media, Do Kwon and his team, Terraform Labs, opted to construct an improved version of the blockchain as a measure of damage control. The launch of Terra 2.0, on the other hand, did not go as planned.
The new coin was trading at a reasonable price, hovering around $19. Despite a great start, the token’s price plummeted to $2.9 in a matter of days.
Investigations Hovering Over Terra
LUNA 2.0 is not only losing face, but it is also appearing to be a failure. Due to potential money laundering, the Terra founder and his crew are currently under investigation by the US and South Korean governments.
The Terraform Lab team is being pursued by South Korean authorities for embezzling BTC reserves that could have saved the UST from losing its peg. Do Kwon and his collaborators are also suspected of evading taxes to the tune of $80 million.
TFL and Do Kwon are being investigated in the United States over UST’s status. In addition, the US Securities and Exchange Commission (SEC) wants to know if the UST was issued as illegal and undeclared security.
Experts Share Their Thoughts
Bloomberg gathered the views of 4 experts on the future of LUNA 2.0- all of them believed that Terra 2.0 has no future.
The founder of Quantum Economics, Mati Greenspan, feels that LUNA 2.0 will not be able to expand. It was just a means for large investors who had lost money in the UST and LUNA crashes to recoup some of their losses. There is no discernible reason for the price of Luna 2.0 to rise.
“Luna 2 was never supposed to last; it was only a way for people who were strongly committed to clawing back some of their losses at the expense of new money coming in from the hype to do so.” I don’t see why the price should ever go up.”
Kunal Goel, a Messari analyst, stated that LUNA 2.0 would not be able to thrive because it was built during a market downturn.
The value of the original LUNA (LUNC) came from its association with UST. Unfortunately, LUNA 2.0 lacks that support. In addition, the Terra team’s legal problems aren’t helping matters.
“There are several issues with Terra 2.0. It went online in a macro and crypto environment that was not favorable. It has no clear point of differentiation from other smart contract platforms because it lacks an algorithmic stablecoin. Finally, investors are concerned about the regulatory overhang.”
Riyad Carey, an analyst at Kaiko, feels that Terra 2.0 will struggle to gain traction in a market dominated by established competitors such as Ethereum, Avalanche, and Solana. LUNA 2.0 also suffers from the removal of the UST link and the lack of a burning mechanism.
“LUNA 2 will struggle to stand out in a dense L1 ecosystem, which includes big names like Avalanche and Solana, as well as Ethereum.” While the original Terra had a thriving community, a lot of it revolved around UST and aUST (UST earning yield in Anchor).”
“Certainly, the burning of LUNA to generate UST influenced part of the price fluctuation. In a nutshell, Luna 2 lacks this mechanism, will face inflation in the form of vesting/unlocks, and will undoubtedly carry the stigma of being linked to the largest ever crypto crash. As a consequence, the road ahead will be challenging.”
According to the CEO and Co-founder of KoinBasket, Khaleelulla Baig, Investors have lost confidence in Terraform Labs and Do Kwon, and everyone wants Luna 2.0 eliminated as soon as possible.
“Everyone wants to get out of the new Luna because the founder, Do Kwon, has lost public confidence and trust.” Luna’s future is bleak. Even when given the opportunity, the founder did not construct firewalls around the algorithm.”
“It’s because of this that they’ve overplayed their hand.” It’s no longer possible to build the new Luna within the existing community. From this kind of speculative coins, the smart money will migrate to basic coins.”