New Terra Blockchain is Live

Terraform Labs has confirmed on Twitter that Terra has begun block production on the newly designated "Phoenix-1" mainnet. This launched at 06:00 UTC, accompanied by a token airdrop for previous LUNA and UST holders.

The launch of the new blockchain is an effort to salvage the remnants of the Terra community following the surprising collapse earlier this month. Terra’s algorithmic stablecoin UST initially fell below the dollar on May 8, sending its associated token LUNA into a death spiral. Within days, UST was trading at just a few cents on the dollar, and LUNA plummeted to nearly zero. As fears of a stablecoin collapse grew, along with declines in other major assets, the fallout wiped out nearly $40 billion in value and wreaked havoc across the entire industry.

Terraform Labs’ outspoken co-founder and CEO Do Kwon proposed on May 16 to fork Terra, claiming that "the Terra ecosystem and its community are worth saving." He outlined a plan to revive the network without including an algorithmic stablecoin, suggesting the distribution of a new token aimed at making Terra investors whole. This plan initially faced widespread hesitation from the community; however, the prospects dramatically improved the following day after more than a dozen major validators indicated their support.

Alongside the blockchain launch, a new LUNA token airdrop went live this morning. According to the distribution plan, 70% of the new token allocation will be given to previous LUNA, UST, and aUST holders (aUST represents UST tokens staked in Anchor Protocol, Terra’s leading DeFi protocol, which offers investors a 20% yield on their stablecoins). Terraform Labs received no tokens from the drop. Eligible addresses can claim the airdrop through the Terra website, and it has also been supported on several major exchanges. According to Bybit, at press time, LUNA was trading at approximately $16. With the new Terra blockchain and LUNA token now live, the original LUNA and UST have been rebranded as LUNA Classic and UST Classic, respectively, while the original network is now referred to as Terra Classic.

The launch of the new blockchain is a bold step for Kwon, who is now facing increasing legal troubles. Several investors are reportedly organizing to file charges against Kwon for fraud, and he is also facing potential criminal liability: according to local reports, South Korean authorities are investigating Kwon for allegedly running a Ponzi scheme, and he has reportedly been fined $78 million for tax evasion by South Korea’s National Tax Service. Since the collapse of Terra, Kwon has remained unusually cagey in his online communications, but he has claimed that Terraform Labs has no tax liabilities in South Korea