Following the recent crash in TerraUSD (UST) and Terra (LUNA), another Terra-based token making headlines recently is the Wrapped Luna (WLUNA). Wrapped Luna suffered a similar fate with the other Terra cryptos as it now trades below the $0.01 level.
Wrapped Luna is an ERC-20 token built to track the value of LUNA on the Ethereum blockchain for DeFi use. This explains why WLUNA partook in the historic crash.
WLUNA was created to allow LUNA holders to trade and participate in the decentralized finance space, thereby retaining value in the Terra ecosystem. Traders could trade LUNA for WLUNA and vice versa using a WLUNA partner.
Wrapped tokens are described as the tokenized form of another crypto asset and usually track the price of the asset it represents. These tokens can be redeemed or “unwrapped” at users’ discretion.
Benefits of Wrapped Luna (WLUNA)
Due to the limitations of LUNA, Wrapped LUNA is the commonly used token by LUNA holders for DeFi activities and transactions. WLUNA offers so many benefits, including:
Allowing users to participate in DeFi protocols
As mentioned earlier, LUNA holders can easily turn in their tokens for WLUNA to use on the Ethereum blockchain in several decentralized finance activities, including staking, lending and borrowing, yield farming, liquidity mining, and many more.
Deploy idle assets on another blockchain
Instead of simply HODLing LUNA, a common practice, users can deploy their idle funds into DeFi staking protocols on Ethereum through WLUNA, which produces even more returns than simply HODLing.
Toggle easily between blockchains
Because WLUNA is pegged to the price of LUNA, you can move funds across blockchains without worrying about losing value from swapping or buying other tokens. This essentially speeds up how you can deploy funds in the crypto industry.
As mentioned earlier, the LUNA collapse also affected WLUNA, which currently trades at $0.000135.
Following the crash, many crypto exchanges have delisted LUNA, and WLUNA only shared a similar fate with numerous delistings. Coinbase recently tweeted that it would halt WLUNA trading from May 27. However, it noted that deposits and withdrawals would go on as normal.
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