The crypto market has posted bearish returns over the last few weeks as traders continue to leave the market. Although some traders still believe in the market’s potential after the losses, others are less than convinced. This is owing to the returns posted by the LUNA token, which Terraform Labs designed. Due to some unfortunate events, the token has published a series of losses, pushing the token creators to look for a way out of the mess. In this article, we will be looking at the LUNA token, its woes in the market, its chances of survival, and the next step by the developers of the token.
What is Terra?
Terra is a blockchain that leverages stablecoins pegged with fiat currencies to achieve a stable payment platform worldwide. According to the details of the project, Terra allows traders to leverage the stability of stablecoins and entangle them with the uncensorable nature of Bitcoin. The platform provides users and traders with fast payments while charging them small fees for transactions. The team behind Terra began developing the blockchain in 2018, with a launch happening a year after in 2019. In 2021, the project announced that it now offers stablecoins backed by as many as four fiat currencies, including the South Korean Won. The native token of the platform, LUNA, is used to carry out several activities on the platform. Traders can use the LUNA in their holding to vote on governance on the blockchain.
How Does Terra Work?
The goal of Terra was to create a payment system that would combat the issue of the price surge concerning transaction fees. Asides from that, the project wanted the system to be able to finalize transactions in the quickest time possible. It provided stablecoins backed by fiat currencies but with a twist to achieve this. The twist was that stablecoins, like Bitcoin, will not be subjected to any regulation. The key to this entire system is the LUNA token which traders use for their day-to-day transactions. Besides trading, the token is also used for staking and acts as a governance tool.
The developers also enabled a dual token system, using its native stablecoin, UST, and its digital token, LUNA, to achieve the aim. To mint UST, the protocol burns LUNA as it opens up traders to exchange their LUNA tokens for UST. The relationship between the two tokens is that of reliability for stability. Burning LUNA drives up the token’s value and ensures that UST has the much-needed stability. Before the token saw the massive crash at the start of this month, about one billion LUNA token was in circulation. Once this figure was passed, the developers would burn the tokens to help stabilize and increase the price of both tokens.
What is LUNA?
LUNA is the native token of the Terra blockchain. Although the blockchain operates a dual token system, its major token is the LUNA token. This is because the token is responsible for the stability of the stablecoin on the blockchain. The developers made the tokens dependent on each other as they needed more people to use UST for the platform’s success. The price of UST also needs to remain stable for LUNA to keep to its normal price, or it risks a massive decline. Asides from that, the token is used for governance, and traders can stake it to earn rewards. LUNA is presently seeing a massive decline of 10.46% in the last 24 hours to sell for $0.00015. It has a trading volume of $1,013,674,444 with a market cap of $982,350,146. There are presently more than 6 trillion LUNA tokens in circulation.
What Happened To LUNA?
Terra has been doing well in the crypto market over the last few years, with the blockchain enjoying a massive influx of new projects. The native token, LUNA, had also been tipped for another all-time high price before the end of this year before tragedy struck. The issue started with UST, the platform’s stablecoin losing its peg to post a massive decline. Although there has been no concrete reason why that happened, others have blamed it on whale investors. Some traders believed that the investors took a large loan of UST and dumped it back into the market.
Although the earlier crash was something the developers could have salvaged, holders of the UST token were overcome by fear and sold most of their UST holdings. This led to the stablecoin losing 90% of its value, pushing LUNA down into the bearish abyss. When a market crash happens, most tokens still hold on to their usual total market supply. For example, Bitcoin’s capped supply of 21 million will remain the same. However, in LUNA’s case, its algorithmic nature caused massive inflation in its supply, causing it to hit a billion supply. Presently, the toKe is now about 6 trillion.
Can LUNA recover?
One way that the LUNA token can regain its previous glory and retain its normal position is to eliminate the excess amount of tokens in circulation. This way, the developers burn the extra tokens and ensure they are in a capped range. Although this has been announced as a means of recovery for the project, it remains for the developers to put it into action and see the results.
Asides from that, another question that trades would interest traders is its stability henceforth. However, fresh news suggests that the developers of the token would be looking at exploring an entirely new blockchain with fresh LUNA tokens. In a program dubbed LUNA 2.0, there have been moves to airdrop new LUNA tokens to users who bought the tokens before and immediately after the crash. The move could be another fresh way to start again. However, the market needs to expect an announcement soon from the project.
Should You Buy LUNA?
In plain terms, buying a LUNA token should be a big NO. Asides from that, most exchanges are still not planning to relist it, while only a few have done so in the last few days. Even though they have listed the token again have warned traders about the volatility that the token is currently experiencing. Take Binance, for example; the crypto exchange has chosen to warn traders before purchasing the token.
However, traders who think they might still be able to get a degree of profit from it can do so. Traders who buy the token now will not be able to get the new LUNA tokens as reports claim that developers have taken the snapshots. With tokens like Shiba Inu also seeing a little bullish runs from time to time with the same trillion market cap, traders could have a chance. However, traders need to purchase this token with only cash they are confident that they can lose.
LUNA Future Price Predictions
It is no longer news that LUNA is in bearish waters for the aforementioned reasons. But while some traders are choosing to steer clear of the token, others are still confident they can get something from it. Presently, LUNA is trading around $0.00015, losing more than 10% of its value in the last 24 hours. However, analysts say this recent bearish cycle might end soon as the token might retake $1 by the end of 2022. 2023 will signal more detailed information about the project’s future as analysts predict that the token might return to being the toast of the market. In that vein, the token will to hover around $3 to end the year.
With everything, traders should endeavor to wait and seek information from the proper channels. You can visit this website regularly for updates about Terra and the LUNA token. With the Terra 2.0 likely to kick into effect, it could be a way to push the token upwards. However, other factors should come into play in the coming months that could tilt the odds in LUNA’s favor. Finally, there is no financial advice better than traders knowing what strategy to adopt when trading. This means they should know when to leave the market, and when to enter the market. Traders should also carry out research and invest with only cash they can afford to spare.
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