LUNA moves closer to ATH as Terra approves 89 million token burn proposal
Nothing stimulates demand like a decline in supply. At least that’s what will happen.
Just ask Terra, the community responsible for maintaining the utility token protocol LUNA and the stablecoin terraUSD developed by Terraform Labs.
The congregation was on Tuesday poll burn nearly 89 million LUNA tokens (about $ 4.5 billion). After the proposal was approved by Terra co-founder Do Kwon, the token price jumped from $ 50 to $ 54, nearing an all-time high of $ 54.77. It then ran into a mini-crisis when almost the entire crypto market turned red. In a matter of hours, the price fell 14%. LUNA, with a market cap of $ 23.5 billion, has since settled at around $ 48.
The proposals 133 and 134, to burn 88,675 million LUNA in the community pool (~ 4.5 billion US dollars), to exchange it for UST via on-chain swap and to reduce the duration of the Oracle reward pool from 3 to 2 years, have passed . “
LUNA is a utility token for decentralized applications based on the Terra blockchain. One of the main uses is to maintain a 1: 1 exchange rate with Terra’s algorithmic stablecoins. As the demand for USTs decreases, more LUNAs are created; it burned as the demand for stablecoins increased.
Following a successful vote, 520,000 LUNA (valued at over $ 25 million) were withdrawn from circulation, with over 88 million remaining tokens being burned over the next two weeks – which in theory would add more to LUNA’s value than ever.
Yesterday’s vote is in line with the larger plan launched by the Columbus 5 network upgrade in late September that changed how and when Terra burns tokens. After the upgrade, the LUNA that was used to mint Stablecoin Terra will be burned forever instead of LUNA being transferred to a communal pool.
Back in May, Kwon explicitly described the token burn from the Terra Community Pool as a revenue-generating event in order to collect initial capital for the Ozone Protocol – the insurance protocol for the use of the growing DeFi space – by Terra.
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