Terra’s catastrophic collapse has left an unpleasant stain on the token holders’ portfolios. Binance, the world’s largest cryptocurrency exchange by trading volume, is included in this list. The exchange’s LUNA stash, which soared over $1.6 billion at one time, has not been sold, according to CEO Changpeng Zhao.
In 2018, Binance invested $3 million in the Terra ecosystem in exchange for 15 million LUNA tokens. Zhao noted that as LUNA reached new highs, that investment grew to $1.6 billion.
However, following last week’s catastrophic fall of LUNA and its sibling token TerraUSD (UST) stablecoin, this stash is now only worth roughly $2,400 — or, as Zhao puts it, “not much.” According to CZ, these tokens are still maintained in the wallet to which they were transferred because they were “never moved or sold.”
Despite the significant losses, Zhao said Binance will ask the Terra team to reimburse retail traders who were severely harmed by the price drop last week before reimbursing the exchange.
The CEO said:
“To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retails users first, Binance last, if ever,”
On the plus side, Binance collected $12 million in UST in staking rewards from LUNA tokens staked by the exchange in July 2021. This was not sold or transferred as well.
CZ also stated that Binance was previously in talks with LUNA about investing millions in the most recent financing round, but the agreement fell through.
Meanwhile, the Luna Foundation Guard, a non-profit dedicated to promoting the Terra ecosystem’s growth, sold 80,081BTC (about 99.61% of total bitcoin reserves) to reimburse the remaining UST customers. The objective is to compensate people with the smallest assets.
When the UST stablecoin started de-pegging last Monday, Terra supporters’ faith was put to the test. The mint-and-burn process and arbitrage were created to make UST and LUNA operate together. The Terra protocol encourages users to burn LUNA and mint UST when the price of UST exceeds $1. Users are also encouraged to burn UST and mint LUNA when the UST stablecoin goes below the $1 mark.
However, this technique failed, and the stablecoin abruptly lost its dollar peg. Following that, LUNA went into a death spiral and lost nearly all of its value, leaving investors distraught.
Do Kwon, CEO of Terraform Labs, has proposed splitting the LUNA blockchain into two, similar to how Ethereum Classic split from the main Ethereum network. Terra (token name: LUNA) will be the name of the new chain, while “Terra Classic” will be the name of the previous, troubled chain.
The Luna Classic (LUNC) token will be used in the latter, which will remain tied to the UST stablecoin. The algorithmic stablecoin will not be part of the new chain, which Kwon claims would be “fully community-owned.”
Because the intention is for both chains to survive, LUNA holders on the Terra Classic chain, as well as residual UST holders, will get an airdrop of the new network’s tokens.
This means that UST and LUNA holders can now choose to stay on the existing chain or start over.
The revised idea will be voted on starting May 18. If passed, Kwon claims that the new blockchain will be operational by May 27.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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