After the shipwreck and the chain of several considerable losses, the Terra blockchain is reborn with a version 2.0. It has taken the name of Terra Classic, and new Luna tokens and other stablecoins are also coming to the platform. The Airdrop of the new tokens made it possible to restore part of the losses of the investors on the old blockchain. But the question arises: is Terra Classic really a good idea?
Too fast implementation of the new Terra 2.0 blockchain
First, it should be noted that the implementation of the new Terra Classic blockchain is a little too fast. Indeed, it only took a few days for Do Kwon, after the collapse of Terra, to announce the arrival of the new version. According to some cryptocurrency experts, this seems like a hasty decision.
In this speed of execution, it is almost certain that the teams of developers of Terra could not correctly fix the defects which led to the collapse of the ecosystem. Therefore, it is to be expected that there will not be much change on this new platform.
Opinions that were not unanimous
The launch of the new Terra Classic blockchain was made following a vote by the Terra project community. It is indeed after the approval of the governance, that Do Kwon officially announced the new version. Still, the votes for Terra’s relaunch were far from unanimous. Proposition 1623 had an affirmative vote of about 65%. So what does the rest of the community think?
About 21% of members did not want to vote on this proposal. But 13% of the community opposed it, with a “no with veto”. This is what has generated a debate between the two clans, including on the one hand the leaders of Terra, and on the other this part of the community which did not agree with the establishment from Terra Classic.
The proposal accepted by the community concerns a recovery plan with a hard fork. Which means that Terra 2.0 had to take over the history of the previous version on its own. Yet Terra Classic is actually a new blockchain in its own right, with the creation of a block Genesis. We must distinguish certain points, especially at the level of the migration of applications that were on the previous blockchain.
A comparison of the history of Ethereum
The Ethereum blockchain has gone through the same course as Terra. Indeed, during the DAO Hack, the value of ETH dropped for a short time. An unknown attacker took advantage of a security breach in the ecosystem to attack Ethereum’s DAO. He was able to draw up to 3.6 million Ether on Child DAO, having a structure similar to that of The DAO. Ethereum executives proposed a Hard Fork, which was accepted by the blockchain community. Two very distinct communities have emerged since then, that of Ethereum Classic and that of Ethereum. Currently, blockchain continues to thrive. The Hard Fork decision was a good decision for the sustainability of the ecosystem.
The Terra blockchain had the opportunity to follow in the footsteps of Ethereum, adopting a true hard fork concept. It was necessary to modify part of the previous version to give birth to version 2.0. However, Terra has opted for the creation of a new blockchain, which will be different from the old version. This decision could be justified by the lack of means available to Terra developers to make major changes to the old ecosystem. Indeed, following the collapse, there are no longer any funds on this platform.
Is it legitimate to create a new stablecoin for Terra?
By thoroughly analyzing the situation of Terra and its new blockchain, is it legitimate for it to base itself on a new stablecoin or is it already doomed to failure? This is a question that should indeed be asked, because despite the robustness of the previous platform, the collapse still took place. The rapid launch of the new blockchain surely did not allow the development of such robustness.
On the one hand, it is still legitimate to create a new stablecoin for the new Terra blockchain. It makes it possible to attract investors thanks to the stability of the platform and the ecosystem. In addition, it allows the development of DeFi solutions for the network and for users. It also provides cash for projects under development. The stablecoin therefore remains a necessity.
But on the other hand, this is the algorithmic stablecoin that is, in a way, Terra’s weakness and played a role in its collapse. The new blockchain has decided not to implement this same system, for the moment, waiting to see how the situation evolves.
It should be noted, however, that it will be difficult for Terra to regain the trust of its community, whether for new members or for former investors. Thus, the legitimacy of setting up a stablecoin will only affect the technical details of the blockchain. With the collapse and huge losses, users will find it difficult to join the ranks of this new platform, the foundations of which are not really sure.
Is the Terra 2.0 project a good or bad idea ? This remains to be seen in the long term. Although the majority of the Terra community approved the proposal of Do Kwon, the implementation of the new blockchain was carried out in a hurry. With this in mind, it is quite hard to believe that all the problems are already solved. It will also have a hard time convincing the old community to join its ranks, because trust is no longer relevant, even if Airdrops have been set up to reward the most loyal.
Currently, we can see that the Luna 2.0 token is still subject to a further drop in value, in just a few days after the launch of the new blockchain. Is this a sign that the latter is really not on the right track?
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Interested in investment and financial markets after a business school in Chambéry, the passion for cryptocurrencies was obvious. The blockchain is surely the universal tool of tomorrow.