This week, backers of the failed cryptocurrency project Terra voted to revive the initiative, with a new luna blockchain and token – and without its controversial algorithmic stablecoin, TerraUSD.

The founders sought the next move for their project, which crashed just as fast as it started. They were looking for the next step forward in the project that crashed as quickly as it took off. collapse of the Terra projectThis led to losses totaling around $60 billion for both the stablecoin, also called UST, as well as its sister cryptocurrency luna. UST fell below $1 earlier this month. This prompted a cryptocurrency sell-off.

Like most stablecoins UST was pegged at a 1 to 1 ratio with USD. One luna was required to mint 1 UST. The structure provided arbitrage opportunities, which were crucial to maintain the peg. Users could swap one luna for UST or vice versa for $1 at a guaranteed market price.

“What Luna did was that they had a very ambitious and optimistic monetary strategy which pretty much worked when the markets were going well but had a weak monetary policy when there are bear markets,” stated Stuti Pantey, a Web3 investor who is also a venture partner at Farmer Fund.

It isn’t first failure of a decentralized algorithmic stabilitycoin. The Terra project was hoped to succeed by many in crypto. Investors may not recover for a while, but it could be long before they do. this month’s Terra fiasco —and that could put the new project on shaky ground.

There is a lot of uncertainty. Whether that will be successful will take a lot of rebuilding trust with investors and builders,” Felix Hartmann, managing partner of Hartmann Capital, told CNBC.

It will take them a long time to get the market cap of billions, which they used before. He added that the founders will probably start from the ground floor. “So it’s something worth watching, but perhaps the real fruition — if it ever happens — would be over a year or two. This month is not the right time.

Regulative hurdles are another concern. Regulators have always been concerned about stablecoins because of the exact same reasons as the TerraUSD crash. They are worried about lack of transparency regarding trading and reserves backing stablecoins, as well market participants’ dependence on them for trading in crypto protocols.

Omid Malekan is a veteran of the crypto industry and an adjunct professor at Columbia Business School. He said, “Algorithmic stabilitycoins are dead as an idea.”

“There’s other coins out there that aren’t as big or as important as UST. They all have problems maintaining the peg,” he said. “That failure has sort of made the other more conservative stablecoins — the fiat-backed ones — seem very appealing in comparison. However, it is still unclear what regulatory response to the whole industry will receive.

—Ryan Browne from CNBC contributed to the story.