The LUNA-pegged token wrapped LUNA (WLUNA), was also affected by this blow to the cryptomarket as its value depends on the performance of LUNA. Between 5 May 2022 and 23 May 2022, the value of WLUNA fell from $86.03 to $0.000209.2.
Terra’s co-founder, Do Kwon, launched a plan to fork the Terra blockchain on 18 May 2022 in an attempt to get the token back to its previous values. However, so far, the plan seems to have had no effect on the WLUNA token price. Will the token resurface and what’s next for the WLUNA crypto price prediction?
What is the wrapped LUNA token?
A wrapped token is a cryptocurrency pegged to the value of another cryptocurrency built to represent it on a separate blockchain. Wrapped coins can be redeemed for the cryptocurrency that they represent at any given moment and their function and operation is very similar to that of stablecoins. However, instead of being pegged to fiat currency, their value mimics that of another digital asset.
Wrapped coins increase interoperability between blockchains that are usually designed in a way that makes it impossible to pass information between them.
Launched in August 2021, the wrapped LUNA (WLUNA) cryptocurrency is the compatible version of the LUNA coin built on the Ethereum (ETH) network.
The LUNA token is the native cryptocurrency of the Terra ecosystem. LUNA is a staking protocol token. TerraUSD (UST) is a stablecoin pegged to the US dollar. UST tokens are minted each time LUNA tokens are burned.
If the value of UST goes above $1, then the same amount of LUNA tokens would be burned, minting more UST and making the stablecoin less valuable. However, if the UST is valued below $1, they can be swapped for LUNA, making the tokens more valuable.
WLUNA tracks the value of the original LUNA token on ERC-20 standards, which means it can be minted on the Ethereum blockchain and has utility with other decentralised finance (DeFi) protocols built on Ethereum. One LUNA can be exchanged for one WLUNA and vice-versa.
Other uses of the WLUNA cryptocurrency include:
Tokenisation – an increased speed of transactions; reduced number of intermediaries; enhanced security; greater usability; and improved transparency.
Liquidity on decentralised exchanges and decentralised applications (dApps).
Interoperability between cryptocurrencies.
On chain ways to enhance policies (rules on asset transfer or trade).
The circulating supply of WLUNA coins stood at over six trillion as of the time of writing (23 May), according to data provided by CoinMarketCap. The cryptocurrency had a market capitalisation surpassing $1.22bn and was ranked as the 2849th biggest token.
WLUNA was on a joyous ride
The wrapped luna coin price was on an upward trend from the early days of its launch, closely following the 2021 surge of the LUNA token.
As the price of WLUNA is directly correlated to LUNA, the token’s 2021 success was driven by developments in the TerraLuna ecosystem.
Although WLUNA’s value dropped in January 2022, it reversed and continued rising until the end of February 2022, when a wider crypto market sell-off wiped out nearly 50% of its value down to $52.71 on 24 February 2022.
At the start of March 2022, the WLUNA to USD price started to resurface once again and hit an all-time high of $117.98 on 5 April 2022 following a month’s pace of steady surging as the double rewards for UST launched on Polkadot (DOT) via StellaSwap (STELLA).
However, the token dipped by around 35% in the following weeks to $76.22 by 18 April 2022. Even though the token regained its value and traded at relative highs throughout the remainder of April and the start of May, more recent wrapped luna token news saw its price dip by nearly 98% from $66.19 on 8 May 2022 to $1.4318 on 11 May 2022.
The WLUNA dip
In the second week of May LUNA was still in the top 10 biggest cryptocurrencies. But, ever since UST lost its peg to the US dollar, the token - along with the wrapped LUNA coin - has been in freefall.
Many attributed LUNA’s freefall to broader negative crypto market sentiment, which saw bitcoin (BTC), the biggest cryptocurrency by market capitalisation, trading below the $27,000 value for the first time since June 2020.
However, days after the dip, reports speculated that the cryptocurrency crashed as investors decided to carry out a plan that saw them purchasing a large sum of BTC to buy UST, with the intention of profiting once the value of UST fell. This led the UST to depeg from the US dollar and lose all of its value, dragging LUNA and WLUNA down with it.
Others speculated that the cryptocurrency lost its value due to its high dependency on the Anchor Protocol, a UST savings account that paid a 20% interest rate and made the asset a very popular investment.
In March 2022, Anchor announced that it was planning to readjust its interest rates after passing a new community vote which would see the rates drop or increase 1.5% each month. Following the news, many investors chose to empty their Anchor wallets and sell their TerraUSD, LUNA and WLUNA tokens.
In a reply to the massive LUNA and UST crash, Do Kwon said on Twitter that he was “close to announcing a recovery plan for $US”, which came days later in the form of a new Terra blockchain vote “to rename the existing network Terra Classic, LUNA Classic (LUNC), and rebirth a new Terra blockchain & LUNA (LUNA).”
1/ Terra governance prop #1623 to rename the existing network Terra Classic, LUNA Classic ($LUNC), and rebirth a new Terra blockchain & LUNA ($LUNA) is now live.— Do Kwon ???? (@stablekwon) May 18, 2022
Vote here: https://t.co/ZlGxNCUTMa https://t.co/plj0guJwao
Does WLUNA have a bright future?
The new community vote proposed by Kwon would see the Terra blockchain split in two. If the vote passes, the old chain will be called Terra Classic and LUNA renamed Luna Classic ( LUNC).
The plan is for the current chain and new chain to exist simultaneously, but operate separately. The new chain, on the other hand, would ditch the UST stablecoin and would instead use the LUNA cryptocurrency.
Although Kwon Do noted that his proposal had “broad support” from the community tagging a number of accounts, many users were unhappy with this announcement. Despite this fact, as of 23 May, the vote seems to be passing with over 171 million investors voting in its favour.
The Terra platform is also planning to launch Terra 2.0, an updated version of its ecosystem.
BigOne Exchange chair in Asia Anndy Lian told Capital.com that Coinbase (COIN), one of the world's leading crypto exchanges, will be suspending WLUNA and UST trading on 27 May 2022, which could be a “sign of big volatility to come”.
Since the UST and LUNA tokens collapsed, many crypto exchanges including Binance, OKX and Crypto.com have also suspended their trading.
Wrapped LUNA token price prediction 2022-2025, 2030
Despite the latest downward price action, algorithm-based forecasting service Wallet Investor gave a bullish WLUNA price prediction at the time of writing (23 May). The site noted that wrapped LUNA is “an awesome long-term investment.”
Based on its analysis of past price performance, Wallet Investor predicted that WLUNA could trade at $76.041 in 2023 and reach $369.024 by 2027.
DigitalCoinPrice supported the positive WLUNA/USD outlook yet saw a much slower pace of growth in the following years, expecting the token to grow to $0.000306 by the end of 2022 and reach $0.000480 by the end of 2025.
By the end of 2028, the site projected that the wrapped LUNA coin forecast could reach $0.000819. Its long-term forecast expected the cryptocurrency to reach $0.00100 by 2030.
Note that predictions about the future of WLUNA can be wrong. Forecasts and analyst expectations shouldn’t be used as a substitute for your own research. Always conduct your own due diligence. Keep in mind that past performance is no guarantee of future returns. And never invest or trade money you cannot afford to lose.
Will wrapped LUNA price go up?
At the time of writing (23 May), both algorithm-based forecasting services gave a bullish WLUNA price prediction. Yet it should be noted that WLUNA crashed massively in May due to problems in the TerraLuna ecosystem. It would take a lot of bullish developments for the token to recover. Note that price predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Should you buy wrapped LUNA tokens?
Cryptocurrency prices are highly volatile, and it’s unknown whether WLUNA will manage to recover previous highs. Your decision to buy WLUNA token should be based on your own portfolio goals, size and risk tolerance. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.