- The UST earned from the burn will go into the community pool.
- The coin’s scarcity may drive up the price of LUNA.
Terra, a smart contract-enabled algorithmic stablecoin venture, approved two requests to burn $4.5 billion of its native token, LUNA, in community pools. Furthermore, the burn will occur every 800 blocks generated. In order to adjust the monetary system to the new Columbus 5 update.
The UST earned from the burn will go into the community pool, where governance will decide how to spend it. The first trade took place earlier this week. After the whole stockpile is destroyed, the community may determine how much of it will be used to bootstrap Ozone, a decentralized insurance system built on Terra. According to a Terra official account tweet, one of the biggest, if not the largest, layer-one asset burning in crypto history. Moreover, long term, the coin’s scarcity may drive up the price of LUNA.
Terraform Labs CEO Do Kwon stated:
“The burn will simplify the narrative of Luna economics, boost staking rewards, and leave the community pool well funded with 10 million Luna.”
Terra Vs SEC
Regulators have targeted Terra. On his way to appear at Messari’s Mainnet conference, Kwon, summoned by the SEC. The subpoena concerned one of Terra’s native protocols, Mirror. Which enables users to exchange tokens that are derivatives tied to certain stock prices. Last month, Kwon sued the SEC for its actions and subpoena service.
Tokens having a limited quantity have appreciated greatly in value. For example, Binance Coin (BNB) increased from $50 to over $600.
Another, Ethereum’s newly incorporated EIP-1559. The network’s pricing model was altered to burn ETH with each transaction. LUNA may continue a similar path, with $80 as a possible short-term objective. Furthermore, price might rise over $100 and join Solana (SOL) as one of the best performers in 2021. According to CoinMarketCap, the Terra price today is $50.81 USD with a 24-hour trading volume of $571,533,440 USD.