Following the recent collapse of the Terra ecosystem this week, VanEck and 21Shares have decided to suspend the creation and repurchase of shares in their respective Terra exchange-traded products (ETPs). The 21Shares Terra ETP (ticker LUNA SW) and the VanEck Terra ETN (VLNA GR) will therefore stop the processes.
Terra’s native cryptocurrency LUNA is said to help the UST stablecoin maintain its peg to the USD. However, the LUNA price crashed all the way to $0 as the UST continued to decouple from the dollar. Ultimately, Terraform Labs had to temporarily shut down the Terra blockchain, which has now finally resumed. Hany Rashwan, chief executive officer and co-founder of 21Shares, a crypto ETP provider, said:
“We will continue to closely monitor this rapidly evolving underlying situation. The Luna network is currently intermittently producing inconsistent blocks and unable to operate normally. As a result, transactions can still be executed, but in a disrupted environment.”
On the other hand, VanEck said it would take a similar stance on the matter. The publisher noted, “The low value of Luna caused issues and risks to the Terra network, prompting Terra validators’ decision to shut down the network. At this time, it is unclear when (and if) it will network restarts.”
Terra’s Path to Recovery
After all the drama that was there, Terra founder Do Kwon came forward with a proposal for a generation path for the LUNA ecosystem. He proposed to reset Terra network ownership to $1 billion and redistribute it. Do Kwon suggested that this amount be redistributed among the LUNA holders, UST holders, the Community Pool and other stakeholders in the Terra ecosystem.
There were also reports that Swiss asset manager GAM would come forward to rescue Terra, but it denied any such plans. It will be interesting to see what other action plans Terra developers have.
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.
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