Terra Luna Classic (LUNC) Burn Progresses At a Slow Pace.

Terra community members engage in burning LUNC in a bid to reduce the token’s circulating supply.

TerraForm Labs is still committed to making investors whole after they suffered a devastating blow, following the collapse of the firm’s ecosystem tokens $UST and $LUNA.

Despite the launch of a new chain and new $LUNA tokens, Terra investors still do not feel the method is sufficient to compensate them for their losses, as they continue to yearn for a burn.

Meanwhile, the creation of new $LUNA tokens implies that Terra now has two $LUNA tokens. While one is referred to as $LUNA, the old one was renamed Luna Classic (LUNC). Both tokens exist side-by-side at the time of writing.

At the moment, the Terra team is focused on boosting the value of the new LUNA tokens in a bid to make investors whole, while not paying much attention to LUNC.

Kwon Creates an Inflammable LUNC Address

As the Terra community is still insisting that LUNC should be burnt to reduce its circulating supply from the more than 6.5 trillion in existence, Do Kwon, the founder, and CEO of TerraForm Labs posted a burn address on his Twitter page.

The address is an inflammable one where the community can send their $LUNC tokens in order to reduce the circulating supply of the cryptocurrency and ultimately boost the value of the cryptocurrency.

Bitquery Stats of LUNC Burns

Since the community burn initiative for LUNC commenced, the inflammable address has been receiving between 20 million and 60 million old LUNA tokens on a daily basis, suggesting that it would take quite a lot of work and commitment to burn more tokens.

According to data on popular block explorer Bitquery, the Terra community has burned over 650 million LUNC since the initiative started, which is nothing compared to the token’s total supply of over 6.5 trillion.

Terra Community Reaction to Burns

Reacting to the slow pace of burning of LUNC, the Terra community on Reddit has made different analyses on how long it would take for investors to burn the entire 6.5 trillion circulating supply.

D33N5 on Reddit said:

Meanwhile, it is still unknown whether the Terra team may decide to participate in the ongoing burn program and increase the amount of LUNC burns recorded daily. For now, the community is heading the burn program.

The company noted how small UST became the major victim of Terra’s collapse. 

Following the unfortunate incident that rocked the Terra ecosystem and the entire crypto market last month, more information has emerged about what caused TerraUSD (UST) and LUNA to suffer a mind-boggling crash.

According to a recent report published by Jump Crypto, the cryptocurrency arm of Chicago-based Jump Trading, noted that UST crashed massively because large investors pulled out of their positions moments after the stablecoin lost its peg.

1/ Over the last few weeks, we at Jump Crypto have been studying the UST depegging and have three key observations. pic.twitter.com/kq48npoM8C

— jump_crypto (@jump_) June 3, 2022

Large UST Investors Excited While Small Ones Trooped In 

While large UST investors were exiting their positions in the stablecoin, small traders were busy buying the dip with the hope that the cryptocurrency will rally again considering the heavy venture capitalists backing the project.

However, things did not happen that way, as the exit of large investors from Terra tokens left a massive vacuum that could not be filled by the entrance of small traders.

In the report written by Jump Crypto researchers Nihar Shah and Maher Latif, while large investors exited the Terra Anchor program as early as May 7, 2022, a day after UST lost its peg to the dollar, smaller investors trooped in a few days later.

These small investors hoped to capitalize on the whopping 20% ROI that the Terra team is offering. However, little did they know that the big players are closing their position in the cryptocurrency.

According to the report:

• “First, the episode was triggered by a combination of trades in the UST/3CRV pool during a seventy-five-minute window on Saturday, May 7.
• These trades involved TFL withdrawing UST liquidity, and two wallets putting large UST sell orders through the pool, upsetting the pool’s balance and depth.
• outflows from Anchor — particularly overnight on May 7 and on the morning and early afternoon of May 9 — put substantial pressure on the UST peg.
• Large depositors disproportionately drove the outflows. In fact, small depositors increased their exposure during this episode.
• the crypto market selloff on May 9 added additional pressure to UST, which may have finally pushed it off the peg by several hundred basis points.
• As a coda to the de-pegging, as the on-chain burn mechanism started printing LUNA to burn UST, the supply of LUNA skyrocketed and the price of LUNA collapsed.”

Jump Crypto’s Relationship With Terra

It is worth noting that Jump Crypto was heavily involved in the defunct Terra blockchain. Jump Crypto president Kanav Kariya is a member of Terra’s governing council and is listed on the TerraForm Labs website, suggesting how close Jump is to Terra.

Despite the relationship between Jump Crypto and TerraForm Labs, the report failed to highlight its role during the collapse of Terra ecosystem tokens.

Although Jump Crypto refused to discuss the role it played during the collapse of UST and LUNA, it is common knowledge that large Terra investors exited earlier than small traders did during the depth of the stablecoin.

Large VCs Massive Gain

As reported earlier, Panthera Capital disclosed that it made over 100x profit from Terra ecosystem tokens before the cryptocurrency crashed tremendously.

According to Joey Krug, Panthera’s fund’s co-chief investment officer, the company made over $170 million from its initial investment of $1.7 million.

Discussing how lucky Panthera Capital was with Terra tokens, Krug said:

“For the large portion which we sold over 2021 and part of 2022, it was a really simple risk management reason. It kept becoming a larger and larger part of the fund and so we had to de-risk it since you can’t really run a liquid hedge fund with one position being a super large portion of the fund.”

Similarly, Hack VC and CMCC Global were also lucky enough to close their positions on Terra tokens before things got out of hand.

New DEX Platform Wants To Burn Luna Classic (LUNC), To Be Launched On Terra 2.0.

After Do Kwon and Terraform Labs rejected community calls to burn LUNA instead of creating a whole new chain, all seemed to be calm, until now. It so happens that not everyone was impressed by Terraform’s decision to not burn the tokens.

Now, a team of developers has come up with a seemingly perfect solution of their own – launch a community-based DEX with the primary purpose of burning lots of LUNC (Luna Classic). For maximum effect, the platform will be called “Burning DEX.”

Facilitate Burning Of LUNC

There are currently close to 7 trillion LUNC tokens minted, and this huge number has greatly contributed to the troubles plaguing the Terra ecosystem. Burning DEX promises to fix the ecosystem by institution a number of measures that give power back to the people and prop up LUNC for success.

To burn LUNC, users will be required to send their tokens to the burning address earlier shared by Terra’s Do Kwon a few weeks ago. Here’s the address:

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Basically, burning tokens involves sending them to an address where they can’t be retrieved. They’re lost forever and totally removed from the ecosystem. This has the effect of increasing demand due to scarcity, and thereby increasing the price.

“Burning DEX” issued a statement on Medium, detailing its mode of operations along with technical details of how the burning mechanism and the trading platform will function.

A section of the statement reads:

“Burning DEX is a community-driven protocol built to benefit all true Lunatics, via the burning of Luna Classic tokens — LUNC. By incorporating the burning of LUNC tokens into the exchange, the team believes that the memetic power of LUNC burning will propel the protocol to heights impossible to reach by centralised, capitalist protocols. The team has a history of delivering projects on both Terra and Ethereum. They were drawn to Terra 2 by the ongoing work and mission of the LUNC DAO team, whom they deeply admire.”

Promote Decentralization

Besides offering high APY to users who provide liquidity on the platform, Burning DEX promises to support total decentralization by giving total control of the platform to the LUNC community. There will also be a fair airdrop to users during the launch. With this, Burning DEX claims to be “a DEX of the people.”

While the platform is planned to be launched on the Terra 2.0, there’s no mention of who is behind its development or when it will go live.

MEXC Global was the first exchange to Vote to Decide on LUNA Burn by Utilising LUNA Trading Fees on the exchange.