NewsLuna died, how long will Luna 2.0 live?

Luna died, how long will Luna 2.0 live?

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In an ecosystem with much stronger “players”, the new Luna 2 and its founder Do Kwon are struggling to regain market confidence while haunted by the losses of the first Luna.

There seems to be no end to the problems for supporters of the failed Terra blockchain, despite the launch of a new digital currency to repay investors who saw their fortunes “evaporate” after the collapse of stablecoins TerraUSD and Luna.

The Luna 2.0 as it is known, was born from the ashes of the ecosystem of the entrepreneur of cryptocurrency entrepreneur Do Kwon, which collapsed after the algorithmic stablecoin TerraUSD’s exchange rate fell below $1 in early May. Any hopes for a quick recovery of billions of dollars in losses, however, are proving to be fruitless given the recent loss of 50% of the value of Luna 2.0, according to data from CoinGecko.

Close monitoring by regulators in both the US and South Korea is exacerbating the situation. Both the US Securities and Exchange Commission as well as the Seoul police are investigating possible violations of federal regulations and allegations of fraud with Bitcoin on behalf of Terraform Labs, respectively.

The views of analysts

Four market experts spoke to Bloomberg on the problems facing Luna 2.0:

According to Mati Greenspan, founder of Quantum Economics “Luna 2 is not designed to survive. It is only a mechanism for partial amortization of investor losses. I believe its value will not rise.”

As for the Kunal Goel, analyst of Messari “Luna 2.0 faces many problems. It was launched in the midst of an extremely difficult time for the cryptocurrency market. Without the designation of algorithmic stablecoin it has no way of differentiating itself from other cryptos. Finally, the authorities’ investigations are causing concern for aspiring and existing investors“.

According to the Riyad Carey, analyst of Kaiko, “the Luna 2 will struggle to differentiate itself in its saturated market L1 ecosystem with major “players” such as Avalance, Solana and – apparently – the Ethereum.

Although the original Terra had a relatively robust ecosystem, much of its activity was centered around the UST and aUST. In addition, the first Luna supported the creation of USTs. Without this mechanism, Luna 2 will face inflationary pressures, while also carrying the “stigma” of the biggest collapse in the history of cryptocurrencies.”

Finally, according to Khalleelulla Baig, founder and CEO of CoinBasket “everyone wants to disinvest from the new Luna, since Do Kwon has now lost his credibility in the cryptocurrency market and community. Luna has no future. Building the new Luna on these shaky foundations makes no sense. Investors will choose to avoid the new cryptocurrency.”

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