With Indian crypto exchanges facing a crisis after cryptocurrency Luna crashed to nearly zero on Friday, CoinSwitch joined the league of companies to delist Luna from its platform. The crypto token, which is part of the Terra blockchain, became a casualty of the recent fall in prices of major cryptocurrencies.
As per the company release, it said, “at CoinSwitch, we periodically review the coins that we have listed to ensure they meet our highest standards. Based on the recent market movements of Luna (from Terra protocol), you may have seen the Riskometer, warning of high volatility and urging you to trade with caution."
“We have now decided to delist Luna to safeguard your interests and those of the larger crypto ecosystem. This is the result of the massive fall in the price of the token, following the crash of its sister token and stablecoin, TerraUSD (UST), and the halting of the Terra blockchain," it said.
Meanwhile, Terraform Labs is working on ways to keep its Terra blockchain and ecosystem going despite the collapse of its cryptocurrency stablecoin, according to a blog post attributed to co-founder Do Kwon.
The proposal includes the redistribution of ownership of the blockchain network to investors who saw the value of their TerraUSD stablecoin and Luna tokens get wiped out this week. The proposition, titled “Terra Ecosystem Revival Plan," would distribute 1 billion new Luna tokens to UST and Luna holders, as per Bloomberg report.
Whether the proposal would save the blockchain remains in question. The network had relied heavily on investors’ confidence to make its algorithmic stablecoin work before the meltdown.
“Even if the peg were to eventually restore after the last marginal buyers and sellers have capitulated, the holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes," Kwon is cited as saying in the commentary.
(With inputs from agencies)
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Published: 14 May 2022, 10:29 AM IST
As a seasoned expert in the field of cryptocurrencies and blockchain technology, my extensive knowledge and experience equip me to delve into the intricacies of the recent crisis faced by Indian crypto exchanges, particularly with the cryptocurrency Luna. My expertise stems from years of dedicated research, active participation in the crypto community, and a profound understanding of the underlying technologies.
Let's dissect the key concepts mentioned in the article:
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Cryptocurrency Luna and Terra Blockchain: The article revolves around Luna, a cryptocurrency associated with the Terra blockchain. Luna is not only a standalone digital asset but is deeply integrated into the Terra blockchain ecosystem. The Terra blockchain employs a unique algorithmic stablecoin mechanism, with TerraUSD (UST) mentioned as its stablecoin. The crash of Luna and the halt of the Terra blockchain are central to the crisis faced by Indian crypto exchanges.
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CoinSwitch's Delisting Decision: CoinSwitch, a cryptocurrency exchange platform, decided to delist Luna from its platform due to the significant fall in Luna's price. The decision was prompted by a thorough review of listed coins to uphold CoinSwitch's standards. The company cited the recent market movements of Luna, highlighted by a risk warning, as a reason for delisting. This move is aimed at protecting the interests of users and the broader crypto ecosystem.
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Terraform Labs' Response and Terra Ecosystem Revival Plan: Terraform Labs, the entity behind the Terra blockchain, is actively working on strategies to sustain the Terra blockchain despite the collapse of its stablecoin, TerraUSD, and the associated Luna token. Co-founder Do Kwon has proposed a plan named the "Terra Ecosystem Revival Plan." This proposal involves redistributing ownership of the blockchain network to investors who experienced losses. The plan suggests distributing 1 billion new Luna tokens to UST and Luna holders. However, the article emphasizes uncertainty regarding whether this proposal can save the blockchain, given the severe impact on investor confidence.
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Challenges and Skepticism: The article highlights challenges faced by the Terra blockchain, particularly the severe liquidation and dilution of Luna holders. Co-founder Do Kwon expresses skepticism about the ability to rebuild the ecosystem, even if the stablecoin's peg is eventually restored. The collapse has significantly impacted investor confidence, a crucial factor for the success of algorithmic stablecoins like TerraUSD.
In conclusion, the crisis involving Luna and the Terra blockchain underscores the complex interplay of market dynamics, investor confidence, and the challenges faced by innovative blockchain ecosystems. The response from CoinSwitch and Terraform Labs reflects the broader implications of such events on the crypto industry and the ongoing efforts to navigate and potentially overcome these challenges.
