After the network collapse Earth (MOON), the project’s founder, Do Kwon, announced a plan to resurrect the network. One of the points of this plan is the creation of a “Hard Fork” — a branch of the network from the blockchain original.
However, many experts on the subject do not want this Fork, nor do they think it would be the Earth network solution.
Currently, the vote for change is indicating that, of the 7,034 voters, 91% do not want the branch to happen.
Before any Fork, you need to tidy up your own house
In the view of Paulo Boghosian, chief analyst of crypto assets of the Traders Club, in general, the crypto market it is a sector that is still undergoing many experiments. He comments that there are several ambitious projects that seek to innovate in the market.
“Luna is an ecosystem that has grown very fast with a very ambitious goal of making an algorithmic stablecoin. The growth was huge, and it happened very quickly, and it became a very big target in the market. And in the market where there is blood, there will always be a ‘shark’ to attack”, he explains.
According to Boghosian, Luna did not have the necessary reserves to protect a stablecoin which reached $18 billion in market capitalization.
The analyst comments that, before any Fork, transparency would be needed on some issues, for example, on how the reserve was used in bitcoins that the project had purchased to try to defend the UST.
“The market needs to know this to rule out, or prove, the hypothesis that they actually did something wrong or malicious. There are many speculations in twitter about whether there was any kind of withdrawal from the project founders or funds that were invested in the project.”
Boghosian says that another factor that could get in the way of Terra’s “resurrection” is the lack of decentralization.
“The owner of the project, Do Kwon, is a guy with serious ego problems, who even offends people who question the Earth on their social media.”
Finally, the biggest problem of all, according to the Traders Club analyst, is restoring the confidence of individual investors, since the number of people who lost all, or a good part, of their investments was enormous.
“There are many who lost everything, or invested more than they should, and lost more than they could”, he says.
Post-Hard Fork Challenges
In the opinion of Rafael Pugliesi, a specialist in behavioral finance and cryptoassets, the most difficult aspect of the Terra Luna ecosystem restoration proposal will be managing the distribution of the 1 billion tokens after the Hard Fork.
“Due to the rampant conversion from UST to LUNA, its supply has greatly increased, reaching over 6.9 trillion LUNA tokens at the time of writing this answer,” he comments.
For him, the rebirth of Terra Luna will occur in one of the most difficult macroeconomic periods of the last decade.
The consequences of the covid-19 crisis, the monetary tightening of the fed and the Russia-Ukraine conflict brought a new low-liquidity monetary environment, he said.
“Therefore, the abundance of resources for venture capital investments may be coming to an end in my opinion”, he explains.
Thus, the expert points out that the Luna community is strong, but at the same time, it is heavily scarred and bruised, and that “distrust and economic challenges can hamper Do Kwon’s new ambitions”.
He ends with a warning about the risks for the retail investor: “Remember that learning to manage the risk of your portfolio can save you from the famous Black Swans, after all, the #1 rule of investments is to survive.”
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