Finally breaking his silence after the recent collapse of the Terra ecosystem, founder Do Kwon came up with a revival plan for the Terra blockchain network. Moreover, the founder also said that they should put their Bitcoin reserve towards the rescue plan.

However, it won’t be so easy for LUNA 2.0 and for Terra to reinvent itself as a formidable Layer 1 platform. Popular crypto analyst Miles Deutscher shares some interesting points in this regard.

In his revival plan, founder Do Kwon speaks of Terra having a “vibrant developer ecosystem” and “strong brand recognition.”

To preserve the developers and ecosystem, Do plans to “rebuild the chain”. Since Terra plans to roll over to a full-fledged L1, it recognizes the fact that UST and LUNA no longer exist in their current form.

Now the Terra ecosystem had the backing of some of the largest venture capital firms such as Galaxy Digital. Why would they keep reinvesting in a system that burned to ashes in days?

Moreover, it will be difficult for them to convince their investors to put their money back into one of the biggest failed projects in the history of crypto. Indeed, we know that the Terra community is one of the largest. However, investor confidence will not be the same again. Furthermore, reports suggest that Do Kwon had previously failed in a stablecoin project called “Basic Cash”.

Future growth and user acquisition will be a tough task

Analyst Miles Deutscher says it will be difficult for Terra to regain control of those valuations. In his recent tweets, Deutscher . said writes

“Remember that crypto valuations are based on future growth. That’s why we’ve seen valuations in the tens of billions for L1s with barely any transaction volume. But with Terra’s reputation being so damaged, acquiring new users/investors becomes a challenge.

Likewise, to get a comparable valuation, Terra would have to factor in significant growth. Where does this growth come from? The acquisition of new investors and users. This takeover becomes exponentially more difficult once you have lost the confidence of the industry.”

Furthermore, he adds that without the UST, Terra’s technology does not leverage other Layer 1s. So it will be even harder to convince that LUNA 2.0 is the place to invest. On the other hand, it will also be difficult for small projects to raise capital to build and develop dApps on Terra.

Deutscher adds that there’s some hope for Terra’s revival, provided it’s community-driven, just like Fantom.

Bhushan is a FinTech enthusiast and has a good flair in understanding financial markets. His interest in economics and finance draws his attention to the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In his spare time, he reads thriller-fiction novels and sometimes explores his culinary skills.

The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication is not responsible for your personal financial loss.





This post Terra founder proposes revival plan, but LUNA 2.0 will be a tough job, here’s why

was published first on https://coingape.com/terra-founder-proposes-revival-plan-but-luna-2-0-shall-be-an-uphill-task-heres-why/

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