Terra Luna ecosystem suffered a heavy crash last year after its stablecoin USTC lost its US dollar peg. Its Founder Do Kwon made several revival plans to get the Terra ecosystem up and running. The Terra Luna burn mechanism is one of those plans to reduce the supply of Luna Classic tokens and increase its value.

How far has the Luna Classic burn mechanism become successful in reviving the ecosystem? How many LUNC tokens have been burned? We will discuss everything you need to know about the Luna Classic burn in this article. Also, the article covers whether the LUNC burn mechanism helps in reviving the Terra Luna ecosystem.

What is Luna Classic (LUNC) Burn Mechanism?

After USTC lost its US dollar peg that led to the historical crash of Terra ecosystem, Luna Classic tokens supply increased significantly. From just 380 million token supply before the crash, the total token supply went to as high as 5.8 trillion while its price reduced by more than 96%.

The Luna Classic community agreed to implement “The Luna Classic burn tax” to burn a portion of this hyperinflated supply and increase its value. Right after the Terra Luna crash, the Luna Classic tokens burn rate was 1.2%. This implies that for every transaction that takes place on the network, the burn mechanism sends 1.2% of the tokens of each transaction to an isolated blockchain address.

The community later decided to reduce the burn rate to 0.2% to encourage transactions on the network. However, the low tax rate didn’t have much effect on the token supply. So, the community decided to increase the burn rate again to 0.5% in May, 2023.

The Luna Classic burn tax received support from popular crypto exchange platforms like Binance and KuCoin. Even when the Luna Classic transactions do not occur on blockchain, LUNC tokens will be burned when their transactions take place on Binance and KuCoin.

How Many Luna Classic (LUNC) Tokens Burned till date?

According to the official Luna Classic (LUNC) token burn tracker, Luncmetrics.com, more than 85 billion LUNC tokens have been burned. The total supply of Luna Classic tokens is 6.82 trillion and 5.86 trillion tokens are in circulation as of December, 2023. As the 85 billion milestone is crossed, LUNC and USTC saw an increase in their prices.

The community started implementing Luna Classic token burn tax in May 2022. Around 5,450,985,596 LUNC tokens were burned in December first week, 2023, including the latest burn of 4 billion LUNC tokens by the Binance exchange on December 1, 2023. The total LUNC tokens burned by the Binance crossed the 43 billion mark with the latest burn.

When is the Next Luna Classic Burn?

The on-chain Luna Classic token burn takes place every day. LUNC burn trackers such as Luncmetrics.com, LUNC burner help users track the number of LUNC tokens burned till now. The burn trackers help users track the number of tokens burned and the changes in LUNC supply.

Binance committed to burn LUNC tokens on a monthly basis. The next burn will occur in the first month of 2024 since the last burn by Binance exchange happened on December 1, 2023. Even after its CEO Changpeng Zhao, CZ resigned and stepped down as CEO, the exchange continued to keep its promise and burn LUNC tokens.

However, the Terra Luna Classic community rejected a key burn proposal of 800 million USTC tokens from the Risk Harbor, or formerly the Ozone Protocol. This is not because the community doesn’t want to reduce the token supply but to find alternative ways to burn those tokens. The community members believe that there are better alternative ways.

One of the Terra Luna Classic validator Lunanauts recommended burning tokens in a legally absolved route for burning those 800 million USTC tokens. This method reduces legal implication but it first needs to pass the voting system to proceed further.

Can the LUNC Burn Mechanism Revive Terra?

Luna Classic burn tax is only one of the several revival plans of the Terra ecosystem. The number of tokens that are burned everyday depends on the number of LUNC transactions that get executed. So, the more the number of transactions on Terra blockchain, the more will be the LUNC tokens that get burned.

As we discussed, more than 84 billion LUNC tokens are burned as of December 2023. However, there is still a long way to go to reduce a considerable number of LUNC tokens and make a difference in its token supply.

Coming to the question whether the LUNC burn tax will revive the Terra ecosystem, it will still take a long time for the burn tax to reduce the supply, increase its price, and revive the ecosystem. Meanwhile, Terra Luna Classic price is pumping for the past month in line with the Bitcoin price rally.

LUNC burn tax combined with USTC perpetual contracts and a considerable amount of investment of Terra Classic Labs in USTC are leading to price rallies of both LUNC and USTC. Amidst the estimations of the upcoming bull market, there is a possibility for the Terra ecosystem to revive and bring back its position in the top 10 cryptocurrencies.

FAQs

How much LUNC has been burned? 

More than 84 billion LUNC tokens were burned as of December, 2023.

Will Luna Classic (LUNC) burn? 

Yes, Luna Classic tokens burn with a burn rate of 0.5% of each transaction that takes place on the blockchain. Apart from this, Binance and KuCoin exchanges also burn a portion of LUNC tokens to contribute to the burn tax.