If you a Terra Luna investor who was impacted by the recent crash you may be asking yourself, “what will happen to my LUNA coins?” In this article we are going to answer this question in detail so be sure to follow along to the end of this article.
May 18, 2022: an exciting day. Terra founded Do Kwon wants to restore the Terra ecosystem through a hard fork. A split of the blockchain then takes place. This happened before with ethereum, which was split into ethereum classic.
According to Do Kwon, this would save the ecosystem, but with an inflation of about 7%. What does this mean for investors of Terra Luna?
Trading Terra Luna?
This is how a hard fork works
A hard fork is nothing but a copy and split of the original blockchain. This also creates a new currency. This split cannot take place just like that, it requires a vote from the board first. The board must then approve this split.
What happens after the Terra Luna hard fork? In theory, the old coins no longer have any value. The new coins work on the new Terra system.
May 20, 2022 – 92% of participants voted against Do Kwon’s proposal for a hard fork, according to a vote in favor. The real voting started on May 18. A day later, the quorum was reached and the ballot was declared valid. The result: 80% in favor and 19% no with veto. The voting is not completely fair because you can actually buy votes. 1 Luna = 1 vote. Large containers can influence the result.
1 billion new coins
With the Terra hard fork it is intended that a maximum of 1 billion new Luna coins will be released. These are then distributed, looking at a snapshot just before the attack (crash). That distribution looks like this:
- 35%: Luna wallets
- 25%: Community Pool, Board Controlled
- 25%: UST holders
- 10%: Luna Holders
- 4%: Essential Developers
- 1%: Emergency allocation to critical developers
On May 20, it was suddenly decided to increase the token supply at launch. The maximum number of these has not been disclosed.
What will happen to my Luna Coins
Not everyone with UST or Luna coins in possession is entitled to the new coins. If you bought them before the attack, you will be allocated a portion. This concerns your purchase that took place on or before May 7, 2022. In other words, before Terra block 7544914 went into effect.
Most investors bought during the decline, which means they are not entitled to the new coins.
The Luna hard fork entails an inflation of about 7%. That should be the case in theory, but practice often shows otherwise. It is suspected that the new coins will be dumped quickly after launch. As a result, the price drops enormously, with yet another disaster as a result.
Timeline related to the split
It is already known when the hard fork should take place (if approved). Below is the timeline regarding the Terra Luna hard fork or better known as LUNA 2.0:
- May 18: voting round of the Terra network proposal
- May 21: Publication of the release and launch instructions
- May 28: Launch snapshot taken and same day network upgrade launch
Criticism from CEO Binance
Binance CEO CZ has criticized this proposal. He explains that a hard fork does not create any value at all and is not going to help the Terra ecosystem. Incidentally, Binance owns a slew of Luna coins, which were worth more than $1.6 billion before the attack. After the attack, that value dropped to about $2500.
No Luna hard fork but burn
Most investors are against the Terra Luna hard fork. They advocate burning the current currency. This involves sending coins to a dead wallet that no one can touch. Subsequently, these disappear from the circulating supply. In other words: the number of coins decreases and the value increases.
Holders can save the LUNA coin themselves
Coin burning does not have to be done by the founder or a company. Shiba Inu is a popular meme coin that is subject to a burning process. It is the holders who burn their coins, reducing the circulating supply.
When Luna’s community is strong enough, they can successfully set up the Luna burning process. This ensures the preservation of the currency and an increase in value.
Good news: Do Kwon has released a burn address, allowing the community to cause the circulating amount of Luna to decrease. In the first 24 hours, 200 million coins had already been burned.
Scan the code or deposit LUNA to:
Contribute to the best LUNA information
As a result of the collapse, Terra-Luna was discontinued on some exchanges. Trade was temporarily not possible. This was necessary because the Terra ecosystem had posed the blockchain. The blockchain is now operational again and trading on exchanges is also possible.
Still, there is still a chance of Luna delisting at large and small exchanges, especially if the hard fork continues. Despite this fact, investors continue to speculate and trade. There is always a small chance that the current Terra Luna and the UST will be revived. Or that someone else takes over the project, after which it can grow again. As a third option: the active burning of coins by the Luna community.
Hopefully this article has given you some clarity as to what will happen to your luna coins.
Speculation can therefore certainly yield something, but just as much cause loss. Therefore, always invest with money that you can afford to lose.