Despite all the chaos in the cryptocurrency markets recently, many have been viewing the recent volatility as presenting prime conditions to trade in. For these traders, pricing volatility like we have been seeing lately gives them the opportunity to ‘buy the dip’, which means acquiring a stock, asset or digital currency when prices have fallen, with a view towards benefitting from the upswing that will follow in the months or years to come.
Cryptocurrency traders are particularly sensitive to opportunities to ‘buy the dip’, given that cryptocurrency prices have historically experienced significant rises and falls.
With this in mind, the recent downswing in the prices of many of the most popular tokens on the cryptocurrency list has led to crypto traders seeking out potential buying opportunities to get in on while the prices are low. Out of the many tokens on offer, one option that many traders have been eying up is Terra Luna.
But what is Terra Luna, why are so many traders viewing it as a sound investment option and is now the best time to invest in it? For the answers to these questions and more, keep reading!
What is Terra Luna?
Terra Luna (LUNA) is a public blockchain protocol that splintered off from the original Terra Classic. Terra Classic became known as one of the many popular fiat-pegged stablecoins. It attempted to bring price stability to the crypto markets, and in doing so to drive the adoption of cryptocurrencies as a medium of exchange.
To fully understand what Terra Luna is, however, you first need to understand how the Terra platform works!
Luna and TerraUSD are the two native tokens of the Terra network, which is blockchain project developed by the South Korean Terra Labs. The Terra ecosystem supports a wide variety of natively built projects, including NFTs, Web 3 applications and DeFi platforms.
Terra’s founders aimed to make good on the original goal behind the Bitcoin project and to make it viable as a medium of exchange. To achieve this, the Terra network used stablecoins, which are pegged to fiat currencies in order to bring SLP price stability. Terra tracked the price of the US dollar, which it achieved by using the ecosystem’s other main token Luna.
Luna basically serves a governance and mining function for the Terra network. The Luna staking protocol absorbs all the volatility of Terra stablecoins. Users can stake Luna to the Terra blockchain validators, who verify transactions on the network in exchange for rewards.
However, following a dramatic collapse in the price of Luna, the older Luna arbitrage mechanism wasn’t able to maintain this price stability. Following this, the Terra network founders relaunched the network under the name Terra 2.0.
Is Terra Luna a good investment?
Before it underwent a massive market correction and essentially collapsed, Luna and the Terra network were a fast-growing force in the DeFi and crypto space. This led to the Terra network overtaking their competitors to become one of the largest DeFi protocols at the time.
However, despite the recent advances that might have been made with the re-launched Terra and Luna, the dramatic nature of this collapse will weigh heavily on investors. While past-performance is by no means a predictor of future successes, you can’t help but take this into account.
Nevertheless, there is a lot to get excited about regarding the Luna 2.0 and Terra 2.0 projects. The South Korean development team is still stacked with talent, and the project founders have proved resilient in the face of all this adversity.
Whether you should invest in these new projects is ultimately a deeply personal question and will be shaped by your investment strategies and level of risk tolerance. If you do want to invest in the Terra Luna projects, it is vital that you do your research and fully understand the entire project before committing any of your funds.
Predictions of where the Luna price is headed are incredibly mixed. However, those on the more bullish end of the spectrum predict that if Luna can withstand the current difficult trading conditions and avoid some of the traps its predecessor fell into, the signs are broadly positive. Whether it will actually be able to meet these predictions, however, remains to be seen!
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