Is Terra Luna classic (LUNC) to $1 realistic?

Although pundits like Michaël van de Poppe of Eight Global have asserted that LUNC can not clinch the $1 price point, the LUNC community continues to sell and run on that dream, so it begs the question, is LUNC to $1 realistic or just a pipe dream sold by crypto “degens” to “shill” their bags.

To find our answer, we go to The Coin Perspective to put things in perspective. The data shows that LUNC can clinch the $1 price point under two conditions. The first condition is that LUNC achieves a market cap of $6.9 trillion, nearly seven times the entire crypto market cap. On the other hand, the second condition is for LUNC to get back to a total supply of $40 billion.

While the first case is very unlikely as the project will have to build an economy capable of surpassing the GDP of Japan, the third highest in the world, the second one looks like it can be a function of time. So the question becomes how long it will take to burn 6.86 trillion LUNC, equivalent to 99.42% of the total supply at a burn rate of 1.2%.

While the volume of LUNC being burned appears high today, it is because the asset has a high volume and low price, which means a lot of LUNC can be burnt at little cost. However, increased burns will likely increase the price, reducing the volume burned exponentially.

Let’s say LUNC gets back to a $40B market cap. So for the LUNC price to reach $1, the Terra classic supply has to be reduced 99% from 6.9 trillion to 40 billion, which a 1.2% burn rate can do, but in how much time?

Reddit user u/squatchi says, “If the float (Float is the regular coins that a company has issued to the public available for investors to trade.) decay exponentially by using the rule of 72. 72/1.2=60, so the float will halve when the on-chain volume reaches 60 times the float. It will take about seven halvings to get to the 99%. it is reasonable for the float to turn over every 3-10 days, so realistically we are looking at somewhere in the range of 3-9 years before that much (99% of supply is burnt) is burned.”

Another Reddit user, u/CASASToken, calculates: “If on-chain volume remains about 100B-200B LUNC every day, around 3B LUNC will be burned daily on average. So in 1 year, almost 1 Trillion will be burned if it stays constant for a year. So by burning 1T LUNC per year. It will take 6 to 7 years to reach a $40B market cap and 1 dollar LUNC price.”

So for Terra classic (LUNC) to reach $1, the coin approximately needs 7 to 8 years for a 1.2% burn rate to burn through 99% of the current supply.

Consequently, the best bet for the community to reach the milestone of a $1 LUNC  and $40 billion supply within a decade is to keep the asset price low and provide incentives for users to carry out on-chain transactions at high volumes. However, it bears mentioning that this logic could be thrown out the window in a bull market. Last Tuesday, Santiment Feed noted that LUNC’s price movement and trading volume closely resemble that of Dogecoin in its run-up to $0.8. However, this could also imply that it may be doomed to face the same fate with a subsequent price crash.

Notably, the latest burn initiative by the community, the 1.2% tax burn proposal on on-chain transactions, has received support from TerraForm Labs, confirming that it will go live on September 20. While this is geared towards driving down supply, a new proposal by Max Callisto to re-enable Inter Blockchain Communication (IBC) could help incentivize decentralized app (dApp) development and interaction even as Prism protocol considers coming back to the Terra Classic network. 

LUNC is currently trading at the $0.0003281 price point, down 19.9% in the last 24 hours.