Terra Founder Proposes Revival Plan But LUNA 2.0 Shall Be An Uphill Task, Here’s Why

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. Besides, the founder also said that they should deploy their Bitcoin reserve for the rescue plan.

However, things will not be as 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 talks about Terra possessing a “vibrant developer ecosystem” and “strong brand recognition”.

To preserve the developers and the ecosystem, Do is planning to “reconstitute the chain”. As Terra plans to pivot to a full-fledged L1, it acknowledges the fact UST and LUNA no more exist in their current form.

Now, the Terra ecosystem had the backing from some of the biggest venture capital firms like Galaxy Digital. Why would they continue to reinvest in a system that got burnt to ashes in a matter of days?

Furthermore, 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. For a fact, we know that the Terra community is one of the biggest. However, the trust of investors won’t be the same anymore. Further, reports suggest that Do Kwon had previously failed in one stablecoin project dubbed “Basis Cash”.

Future Growth and User Acquisition Becomes an Uphill Task

Analyst Miles Deutscher says that it would be difficult for Terra to command those valuations once again. In his recent tweets, Deutscher writes:

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

Similarly, for Terra to command a comparable valuation, it would need to factor in sizeable growth. Where’s this growth coming from? The acquisition of new investors and users. This acquisition becomes exponentially harder when you’ve lost the trust of the industry”.

Further, he adds that without the UST, Terra’s tech won’t give it any leverage over other Layer 1s. Thus, it will be even more difficult to convince that LUNA 2.0 would be the place to invest. On the other hand, it will also be difficult for small projects to pull 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.