What is Wrapped Luna and How Does it Work?
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The crash of Luna in May 2022 has had a widespread impact on the cryptocurrency market. Wrapped Luna, which was created to track the value of Luna, suffered the most critical hit, resulting in a significant price decline.
The price of Wrapped Luna has fallen precipitously as a direct result of the drop in Luna’s value. Consequently, Wrapped Luna is currently trading at a much lower price than before, leaving investors concerned about their investments.
Despite the tough times, there may be some hope for Wrapped Luna. With the recent launch of Luna 2.0 and the Terra Luna vote for a new chain, there might be a possibility for recovery. However, only time will tell if Wrapped Luna can bounce back from this sudden plunge in price.
Rebranded as WLUNC
By April 2022, as observed on CoinMarketCap, the number of addresses holding Wrapped LUNA had significantly increased. This was mostly due to the token’s growing popularity among investors, who were keen on capitalizing on its massive potential. During this period, WLUNA was trading at $116, which was the same as the value of Luna.
However, the situation took a drastic turn after the collapse of the Terra stablecoin in May 2022. The sudden crash of Luna left many investors in a state of panic and confusion. In response, the Terra community voted to split the blockchain into two separate chains, which was seen as a necessary step to stabilize the ecosystem. As a result, the original chain was rebranded as the Terra Classic network, while another new chain was created to host the updated version of the ecosystem.
With the launch of Terra Classic, the community also introduced a new LUNA Coin, which was named LUNA Classic (LUNC). Additionally, they released its wrapped version named Wrapped LUNA Classic (WLUNC). The launch of these coins was meant to offer a fresh start to the Terra community, providing the community members with innovative solutions and advanced tools to rebuild their network.
However, the launch of the Terra Classic network was met with some challenges. The value of WLUNC, which is tied to the value of Luna, experienced a major decline similar to the original cryptocurrency.
As a result, WLUNC lost 99.9% of its value, and as of today, it is trading at $0.0001079. Despite these challenges, the Terra community remains optimistic and is working tirelessly to ensure the network stabilizes and regains its value, even if doing so is exceedingly unlikely given everything.
What is Terra?
Launched in April 2019, Terra gained considerable popularity in the blockchain industry due to its unique approach to bridging the gap between fiat currencies and Bitcoin (BTC). The platform’s mission was to create a decentralized financial framework that is accessible to users across the globe.
One of Terra’s key features was its ability to combine the stability of fiat currencies with the censorship resistance of Bitcoin. This unique combination provided users with the best of both worlds, making Terra an attractive option for those who want to ensure that their financial transactions are secure and reliable.
In addition to its innovative approach to financial transactions, the Terra blockchain was also known for its use of distributed consensus over the native staked asset, LUNA. This helped to ensure that the platform is secure and able to withstand any potential attacks or threats.
Moreover, Terra supports the issuance of price-tracking stablecoins such as TerraUSD, TerraKRW, etc. These stablecoins were pegged to some of the most popular currencies worldwide, which means that users could transact in their preferred currency without the volatility that is often associated with digital assets.
But that’s not all. As most of you already know, WLUNA is the native utility token of the Terra platform. It served a variety of purposes on the platform that made it a valuable asset for blockchain enthusiasts. Developed specifically for LUNA holders, the token allowed users to hold, trade, and participate in decentralized applications of DeFi on Ethereum.
Overall, Terra’s unique approach to investments and its focus on creating an inclusive and sustainable financial ecosystem make it an exciting and innovative platform to watch in the coming years. As the world becomes increasingly digitized, Terra is well-positioned to play a pivotal role in shaping the future of finance.
How Does WLUNC Work?
Wrapped Luna (WLUNA) is a unique token that sets itself apart from Luna. One of the major differences between the two is that WLUNA was minted on the Ethereum blockchain, which made it an ERC-20 token. This means that WLUNA could be utilized on Ethereum, a feature that was not available to Luna.
The Ethereum blockchain opened up a whole new world of possibilities for WLUNA holders. WLUNA holders were able to access the thriving DeFi ecosystem that Ethereum offers. This means that they could enjoy all the benefits offered by DeFi protocols, such as liquidity provision, yield farming, and much more. By freezing their Luna tokens and minting Wrapped LUNA tokens on Ethereum, they could also put their idle tokens to work by locking them up in DeFi protocols.
The process of minting WLUNA was simple as well- token holders could freeze their original Luna tokens and mint Wrapped LUNA tokens on the Ethereum blockchain. This allowed Luna token holders to lock their idle assets in DeFi protocols, thus, providing liquidity and earning rewards.
What is Terra Luna 2.0?
On May 28, 2022, the Terra ecosystem launched a new chain named LUNA 2.0. The Terra (LUNA) coin, which debuted at $17.80, experienced a brief spike of $19.53 in the first hour of trading, highlighting the market’s enthusiasm for the new chain. However, the excitement proved short-lived, and the prices quickly settled down.
In addition to LUNA 2.0, the old Terra Classic chain coexists with the new chain. It is worth noting here that Terra Classic currently boasts a larger market capitalization of around $645,789,225 in comparison to LUNA 2.0, which has a market cap of approximately $326,626,790. This shows that while LUNA 2.0 made an impressive entry into the market, it still has a long way to go before it can rival the classic chain’s popularity. Nevertheless, the Terra ecosystem made significant progress with its new launch, and the future doesn’t look dark for the LUNA 2.0 chain either.
The listing of Luna 2.0 (LUNA) on Binance, KuCoin, and OKX earlier this year had not been able to boost its performance as expected. Despite the initial listing hype, the coin’s value remained relatively stagnant, hovering between $1.50 and $2 for several months. It did see a bit of improvement, though, with a rally of about 200% on September 9, 2022.
But then, things took a turn for the worse. Following the issuance of an arrest warrant for Terra co-founder Do Kwon by a South Korean court later that month, the Terra Classic (LUNC) token took a hit, crashing to $0.000291, down over 20%. The repercussions were felt across the Terra ecosystem, and LUNA 2.0 was not immune to the consequences. LUNA, in turn, crashed 40% in value.
However, it is important to bear in mind that Terra Luna is not the only cryptocurrency that has been affected by recent events in the cryptocurrency world. Even the most established coins like Bitcoin and Ethereum have experienced fluctuations in their prices. As the world’s first stablecoin, Terra Luna was a unique project that gained a lot of attention in the crypto community. However, the recent setbacks serve as a reminder of the volatility of the crypto market in general and the need for exercising caution when making investment decisions.
The Crash of Luna and its Impact on the Crypto Market
The Luna crash has had a lasting impact on the crypto market, sending shockwaves throughout the industry. The once mighty Luna coin, which had enjoyed a stable peg to the US dollar, experienced a decline in its value by a staggering margin, causing widespread panic amongst investors. The fallout from this event has been significant, with many traders and analysts questioning the long-term viability of stablecoins.
The UST depegging has only added to the skepticism surrounding stablecoins, especially algo-stablecoins like the Shiba Inu stablecoin SHI. It is now clear that the crypto market is still susceptible to surprise shocks and sudden changes.
Despite the recent downturn, the market is showing some small signs of recovery. Bitcoin has made a strong comeback, returning to the $30,000 price point, and Ethereum has also almost risen above the $2,000 mark. However, the industry remains on edge, given the magnitude of the Luna crash and its implications for the broader crypto ecosystem.
In the aftermath of the Luna crash, other stablecoins have also suffered losses, with the Justin Tron-backed USSD losing its peg to the US dollar. It remains to be seen how the market will react to these developments, but one thing is clear - the crypto industry is still maturing, and there will be bumps along the way.
Since its crash, the price of Wrapped Luna has been a source of speculation among cryptocurrency enthusiasts.
Crypto investors started paying attention to the project after its meteoric rise to the top, closely monitoring its price movements since its spectacular ascension to become one of the top ten largest crypto coins by total market value.
Unfortunately, the recent crash had a significant impact on Luna’s price, and it lost over 99.9% of its value.
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Please note that the Content may have been generated with the Help of AI. The editorial content of OriginStamp AG does not constitute a recommendation for investment or purchase advice. In principle, an investment can also lead to a total loss. Therefore, please seek advice before making an investment decision.
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