In the wee hours of the morning on May 11, the crypto space watched on in horror as the Terra ecosystem collapsed to near-zero in epic fashion, taking roughly $30 billion in value ($44 billion AUD) and the reputation of the digital asset industry down with it.
Over the past few weeks, crypto traders began piling money into the Terra ecosystem, causing insane upwards price action causing the subsequent rallies of its two native tokens, Luna Classic (LUNC) and LUNA 2.0 (LUNA2).
On Friday September 9, the price of LUNA surged 245% from US$1.98 to US$6.84 within three hours, according to TradingView.
It’s critical to note the difference between these two tokens. Following the original fallout in May, Terraform Labs renamed the original LUNA blockchain to Luna Classic (LUNC).
LUNA 2.0, or just (LUNA) was launched on May 28, exactly two weeks following the Terra implosion. LUNA 2.0 symbolises Do Kwon’s attempt to restart the Terra ecosystem and create a new blockchain upon which to run a “decentralised money”.
The most recent LUNA pump occurred following a prolonged recovery in price from the LUNC token. The LUNC ecosystem has staged a strong recovery following a series of new developments. At the time of writing it has grown roughly 35,000% from its all-time-low following the Terra implosion.
One of the main reasons for Terra’s recent rally owes to Terra passing governance proposals to implement a 1.2% tax on all of its on-chain transactions. This means that 1.2% of the LUNC supply will be burned every time an on-chain transaction occurs.
Additionally, a new staking system went live on 27 August. At the time of writing, 633 billion LUNC have been staked, against its net supply of 6.9 trillion units, which is also considered to be a factor in LUNC’s surge in price.
Is Do Kwon setting up a LUNA rug pull?
Prominent Terra whistleblower, who goes by the pseudonym FatManTerra on Twitter, reported a suspicious transaction worth 435,000 LUNA2 tokens to Binance, alleging that the transaction was TerraFormLabs removing money from the LUNA ecosystem.
FatMan doubled down on his indictment of the now-infamous Terra founder, “Do Kwon scammed honest, hard-working people who sought security. They shilled you stability, they shilled you decentralisation, they shilled you the future of money — but they used you as exit liquidity”.
Do Kwon subsequently dismissed FatMan’s allegations in a shortly-worded reply on Twitter, asking “How does one continue to simply make up shit?”
Markets have cooled, and a small correction has already taken place. At the time of writing LUNC has since plunged 35% from its September 9 highs to US$0.0004444, and its sister token LUNA has fallen 26% to $US5.20.