The Terra (LUNA) token and its sister token, stablecoin UST, have both risen 1500 percent and 350 percent from their lows since their historic plunge to the ground.
LUNA’s price soared over 1000 percent to $0.0005395 on Saturday, fueling euphoric sentiments among LUNA investors after losing over 99 percent of its original worth on Thursday.
LUNA suffered its biggest sell-off yet this week, dropping to $0.22 on Wednesday after UST, Terra’s algorithmic stablecoin, went below the $1 peg. The de-peg was purportedly caused by several major crypto investors fleeing the stablecoin fearful that Terra’s plan to back UST with Bitcoin would implode.
The Terra team announced the stoppage of the Terra blockchain “with a plan to reconstitute it” on Friday, causing the largest crypto currency exchange, Binance, to suspend trading of LUNA pairings.
After Terra stated that its blockchain has resumed block creation following the huge crash, Binance allowed spot trading for LUNA/BUSD and UST/BUSD on its platform. The validators decided to make on-chain exchanges impossible.
The exchange also allowed simultaneous deposits and withdrawals for both tokens. However, it cautioned investors to conduct their own study into the tokens’ fundamentals.
After other major exchanges relisted LUNA and UST, the signs of life have been revived. Terraform Labs co-founder Do Kwon has offered a solution to save the Terra ecosystem.
The suggestion, which was posted on Terra’s research forum, is similar to a Terra blockchain restart, and it argues that the Terra community should rebuild the chain in order to protect the community and developer environment.
Validators should reset network ownership to 1 billion tokens distributed among LUNA and UST holders, as well as a community pool for future development funds, according to Kwon.
40% of the newly distributed tokens would be distributed to LUNA holders who held the asset prior to the depegging event, 40% to UST holders on a pro-rata basis at the time of the new network upgrade, 10% to LUNA holders just before the chain ceased operations, and the remaining 10% to the development pool.
Kwon feels that repegging UST to the US dollar would have little impact given the large liquidity events that have transpired across the Terra ecosystem this week. To put it another way, faith in the stablecoin paradigm has been irreversibly shattered.
The price of the LUNA token has increased by 300% in the past 24 hours. It is now trading for $0.000468 on average. Luna’s 24-hour trade volume has increased by 341% to $8 billion.
Meanwhile, UST, Terra’s dollar-pegged stablecoin, has increased by 51% in the last 24 hours. UST is currently trading at $0.12, after a significant drop. It still has a market capitalization of approximately $2.66 billion according to coinmarketcap.