Cryptocurrencies haven’t had a good time in May, with bitcoin down for an unprecedented eighth consecutive week.
It’s going tocreate a new blockchain called Terra, with the existing chain being renamed to Terra Classic.
The new Terra will produce luna coins, and existing luna will turn into luna classic.
New luna coins will be minted and distributed to those who lost money in the TerraUSD/luna crash.
Unlike stablecoins like tether and USDC, UST isn’t backed by reserves of US dollars.
(Full explainer here.)
UST depegged to 98 cents, and the mechanism of exchanging UST for luna couldn’t keep up.
That resulted in investors losing confidence in the system, and for both UST and luna to crash.
UST is currently trading at 8 cents, and luna at a fraction of a penny.
Over $17 billion in crypto was wiped from the crash.
3/ It will effectively create a new Terra chain without the algorithmic stablecoin.
The chain upgrade will commence a few hours after the Launch snapshot.
In essence, this means the creation of a new blockchain that’s modeled on the previous one.
Such a move has something of a precedent.
The most famous fork in crypto history happened to ethereum in 2016.
“A chance to rise up anew from the ashes.”
