How To Buy Terra (LUNA) In Australia

The original Terra Luna project was founded in 2018 by Do Kwon and Daniel Shin, with the mainnet launching in 2019. Kwon and Shin envisioned Terra as a platform that combined the stability of fiat currencies with the advantages of blockchain technology, offering users faster and more cost-effective settlements. They believed that this approach would promote greater blockchain adoption.

The original Terra Luna project was composed of both a blockchain with native currency LUNA, as well as an algorithmic stable coin UST. The mechanism which was designed to keep UST around the $US1 mark was tied to arbitrage. In the Terra ecosystem, LUNA could always be swapped to UST at the guaranteed price of $US1, no matter what the real market value was. This meant that if UST trended outside of its peg, users in the system could bank a guaranteed profit by either selling LUNA for UST or vice versa. The idea was that people would constantly take the opportunity to make a profit if UST strayed above or below $US1, keeping it around this level most of the time.

Critics were skeptical of the stability mechanism of UST since inception, however, rising prices in the bull market helped to cover cracks in the system and helped to maintain the peg. However, as the bear market of 2022 hit, cracks began to form and the Terra project began hemorrhaging money trying to retain the peg. Eventually, in May 2022, the system collapsed catastrophically, erasing 10s of billions of investor funds overnight.  

The mechanism which was designed to keep UST around the $US1 mark was tied to arbitrage. In the Terra ecosystem, LUNA could always be swapped to UST at the guaranteed price of $US1, no matter what the real market value was. This meant that if UST trended outside of its peg, users in the system could bank a guaranteed profit by either selling LUNA for UST or vice versa.

The Terra Luna 2.0 coin is a reincarnated version of the one involved in the collapse of the original Terra blockchain. Not to be confused with Terra Classic and Luna Classic, the chain from which the new Terra blockchain hard forked and its native currency, the new Luna is no longer associated with the Terra US (UST) stablecoin.

Terra Luna 2.0 launched at around $US6.30 in June 2022 before a wide-scale sell off saw the token lose almost 70% of its value. Prices plateaued until early September 2022 when they rallied to a peak of $US7.24 before trending to new lows. As of March 17, 2024, LUNA is trading at $US0.88 and has a fully diluted market capitalisation of $US950 million.

It’s this kind of volatility in crypto that has led to repeated warnings from the Australia’s financial watchdog, ASIC. ASIC warns people to be highly cautious when investing in cryptocurrency and be on the look out for scams. What’s more, as the past year of news updates indicate, Luna has been on quite the ride, and investors would be wise to tread very carefully.

If you’re aware of the risks but you’re still interested in buying the new Luna token, here’s how to do it.

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In November 2022, FTX—the fourth largest cryptocurrency exchange in the world—its sister firm Alameda Research and 130 affiliated companies under the banner of FTX Group filed for bankruptcy.

It was news that shocked the crypto world, with the market dropping across the board. It came after rival cryptocurrency exchange Binance had expressed its intention of an acquisition, before promptly reneging on the deal. Apparently, after doing some due diligence, Binance chief executive Changpeng “CZ” Zhao  announced that he was liquidating all Binance’s holdings of FTX’s cryptocurrency FTT.

“Liquidating our FTT is just post-exit risk management, learning from Luna,” CZ posted on Twitter, pointing to “recent revelations that have came to light”.

These ‘Luna lessons’ refer to Terra Luna’s sudden downfall; Terra Luna was once worth around $US116 per coin. Today, the coin (which has been renamed LUNC on exchanges) is worth essentially nothing at $0.0001455 a token with the price continuing to decrease. Terra 2.0, the new version, is at $US0.88.

The story of Luna’s downward spiral is much the same for FTX—which was valued at $US32 billion at its peak in 2022 ago—causing many in the crypto scene to be wary of history repeating itself.

“Much like the Terra/LUNA tokens earlier this year, it is possible for FTT to become valueless in days,” noted Josh Peck, founder of TrueCode Capital.

Choose an Exchange

If you are still keen to buy Luna, you’ll need to use a reputable crypto exchange to swap your fiat currency (Australian dollars) for Luna.

Since Luna relaunched after having been pulled from exchanges following the original project’s crash, the token hasn’t yet returned to all exchanges. At the time of writing, Luna was available from Binance, KuCoin, eToro and a handful of other exchanges.

When choosing an exchange, there are a few important things to look out for, such as:

• Payment methods: Most exchanges accept bank transfer, credit and debit cards. Bank transfers are the most cost-effective and most widely accepted payment method. Some exchanges charge fees for card payments. PayPal isn’t widely accepted.
• Wallets: Most exchanges offer integrated wallets in which to store your Luna. If you’d prefer to store your crypto in a third-party wallet, check if the exchange allows transfers out and whether there are any fees to pay.
• You can read more about the Best Exchanges for Australians with our guide.

Once you’ve chosen a payment method, navigate to the Luna page in your chosen exchange (be careful not to choose Luna Classic, which has the ticker LUNC) and tap in the amount you’d like to invest.

Once you’ve chosen a payment method, navigate to the Luna page in your chosen exchange (be careful not to choose Luna Classic, or LUNC) and tap in the amount you’d like to invest.

Many exchanges offer an integrated wallet to store your Luna in, but you may want to store your crypto in a third party wallet, or offline in a cold wallet.

Online ‘hot’ wallets are a target for hackers. Tokens held in them can and have been stolen, but the upshot is that if you were to lose your wallet credentials and couldn’t access your tokens, the exchange could help you recover them.

Offline, ‘cold’ wallets are harder for hackers to access because of the ‘air gap’ between the hardware and your connection to the internet. However, if you lost your access to your wallet (for example, you lost your credentials), you could be locked out of your own wallet with nobody to help you.

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Predicting the future of Luna 2.0 with certainty is challenging, particularly in light of its UST stablecoin collapse and the persistent stagnation it faces. In addition to these issues, Luna 2.0 is grappling with the effects of a regulatory crackdown on stablecoins, which has further dampened the platform’s ability to regain relevance and popularity in the DeFi space.

The original Terra Luna crash has also had a devastating impact on investor sentiment surrounding the project. The founder, Do Kwon, is now facing charges of fraud in the US and South Korea, adding another layer of uncertainty to Luna 2.0’s prospects. 

Kwon was arrested in 2023 after attempting to travel out of Montenegro with falsified documents. Both the US and South Korea requested Kwon’s extradition, which the Montenegrin high court recently granted to South Korea.

These challenges, combined with the dominance of Ethereum and its successful upgrade to a Proof-of-Stake (PoS) consensus mechanism, make it even more difficult for Luna 2.0 to recover.

Moreover, the emergence of Layer 2 chains secured by Ethereum has created additional competition for Luna 2.0. These Layer 2 solutions offer users lightning-fast transactions, low fees, and enhanced security, providing a more attractive alternative for DeFi application usage.

To overcome these obstacles, Luna 2.0 must focus on enhancing the security and stability of its blockchain while also nurturing a diverse ecosystem of DeFi projects. These efforts could help rebuild trust among investors and provide the foundation for future growth. However, the platform’s ability to navigate the challenges ahead, adapt to market changes, and regain investor confidence will be critical in determining its future in the world of decentralised finance.

For the reasons outlined above, it is unlikely that Luna 2.0 will ever make a comeback and reach the heights that the original project achieved. However, as with anything in crypto, strange things can and do happen, so nothing is out of the question. Investing in Luna 2.0 comes with risk and you should be sure to do your due diligence before investing any capital into this project.

This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class.  Cryptocurrency is unregulated in Australia and your capital is at risk. Trading in contracts for difference (CFDs) is riskier than conventional share trading, not suitable for the majority of investors, and includes the potential for partial or total loss of capital. You should always consider whether you can afford to lose your money before deciding to trade in CFDs or cryptocurrency, and seek advice from an authorised financial advisor.