Key Takeaways:
- Terra's resurrection and LUNA 2.0 are doomed, says Freedom Research.
- Airdrops tend to lower an assets price, especially during a bank run.
- Potential investors could turn to Maker DAO and Tron instead.
YEREVAN (CoinChapter.com) – A case study from analytical platform Freedom Research asserted that no amount of LUNA 2.0 airdrop could resurrect the former stablecoin crash cushion. “Terra is dead” after the $45-billion implosion,- they stated. So how should traders approach LUNA 2.0? Let’s retrace the steps and find out.
Terra 2.0; why is LUNA 2.0 primed for failure?
As CoinChapter previously reported, the Terra ecosystem collapsed after the main stablecoin TerraUSD (UST) lost its dollar peg. LUNA followed and lost virtually all value, subsequently evaporating $45 billion from the ecosystem. After bottoming out at $0.00001675 on May 13, the token traded 670% higher at $0.00013 on May 27.
However, the community voted in favor of Proposal 1623, which suggested a new Terra 2.0 genesis. According to the announcement, the subsequent LUNA 2.0 airdrop would commence on May 27 as well.
Also read: Terra LUNA suicide shakes the crypto market; Do Kwon “heartbroken.”
Several major crypto exchanges voiced their support for the seemingly resurrecting project and agreed to list LUNA 2.0. According to Terraform Labs’ CEO, Do Kwon, those exchanges included Kraken, Gate.io, KuCoin, FTX, Huobi, MEXC Global, OKX, ByBit, Bitfinex, and others.
The airdrop might miss the target.
Freedom Research, on the other hand, disagreed. They pronounced Terra’s “veil of legitimacy” gone, thanks to Kwon’s “risky and arrogant actions.”
Additionally, the platform based its opinion on other “free money” airdrops in the past. For example, in the case of Uniswap (UNI) and Ethereum name service (ENS) airdrops, the traders pulled a bank run after receiving the tokens out of volatility fears.
Also read: Terra (LUNA) comes back as Terra 2.0- LUNA 2.0 listings underway.
Since Terra 2.0 is attempting an airdrop during the “most extensive crypto bank run in history,” it might miss the target, says the research. Moreover, as Terraform Labs lost credibility after the UST collapse, attracting holders might prove futile.
How should investors trade LUNA 2.0?
As mentioned, the airdrop has already begun, and many former and current LUNA holders got their cut. However, Freedom Research warned traders against falling for LUNA 2.0.
Notably, Terra’s collapse has created space for other, more successful protocols to take its place. For example, Tron’s new algorithmic stablecoin, “Decentralized USD” (USDD), might fill LUNA’s shoes. The researchers also noted that the similarities in structure between Tron and Terra might not do USDD any favors in the long haul but will attract the same retail audience, promising short-term gains.
Also read: Terra risks facing legal action after its native token LUNA crashes 99%.
Another valis contestant for a leading stablecoin is Maker DAO’s stablecoin DAI. Since DAI has been around since 2015 and is inherently over-collateralized, crypto investors perceive it as one of the safest stablecoins.
