It’s been almost three weeks since the Terra network went through the worst crisis it has ever suffered from. Following the crash on May 8, the entire Terra network team and the Terra community were on their toes to fix the problem.
Even many major and highly reputed cryptocurrency exchanges launched offered their support to Terraform Labs in fixing the problem. It has been reported that many exchanges did help the Terra network teams in dealing with the problem swiftly.
From May 8 until now, Terra has made significant developments. Last week, the Terraform Labs founder, Do Kwon announced that they will be launching the new Terra blockchain dubbed “Terra 2.0”.
Do Kwon also announced that the new blockchain will host a new native token that will supersede the former one. He confirmed that the name of the old Terra token will be changed to Terra Classic (LUNC).
With the help of the Terra 2.0 blockchain and the native token, Terraform Labs wants to revive the old worth of LUNA. However, there are factors that are currently stopping it from gaining such recognition and worth in the market.
Let us have a look at these factors and see what their impact on the current situation of LUNA is:
Loss of Trust
No matter the claims Do Kwon or the Terraform Labs makes, the May 8 crash has dealt a tremendous amount of damage to the company. There is a great loss of trust that Terraform Labs has incurred due to the catastrophic impact of the de-pegging.
Many of the loyal and long-time community members of Terra are now feeling compelled in distrusting the Terra project. It is a factor that is forcing the investors out of Terra. They do not want to face the same situation again by trusting Terra. Terra will need to prove for the long term that it is stable and has high potential, and only then it can regain the same level of trust.
The investors have very high insecurities about the project. In normal circumstances, millions of users would invest money into Terra without giving it a single thought. Now, people are not confident about doing it because of the overall situation of the Terra network. Terraform Labs has to provide very strong evidence about the project and the future of Terra 2.0 before the investors can start investing in Terra.
South Korean Authority Probes
The major negative factor is the probes being launched by the South Korean investigative authorities against Terraform Labs. Many South Korean Terra community members filed lawsuits against Do Kwon for the crash. Now the South Korean authorities are investigating the matter and have launched a probe against the Terraform Labs’ employees.
This factor has the potential to fully crash the Terraform Labs. Therefore, the investment community has to be very careful when investing in LUNA.
At the time of writing, LUNA stands at $9.05, and it has reached this level experiencing a 53.66% surge in the past 24-hours. The overall trading volume of LUNA in a 24-hour period is worth $239.04 million.