Terra Classic Burn: The Reason Behind LUNC and LUNA Recent Spike

One of the most talked about things is the Terra Classic (LUNC), with the burning tax being reduced from 1.2% to 0.2% thanks to Proposal 5234. This means fewer tokens are sent to the burn wallet after each transaction, but more Terra Classic (LUNC) transactions are processed overall.

The Binance exchange has donated more than 13.5 billion LUNC tokens for burning, while the LUNC DAO and Allnodes, two LUNC validators, have torched a further 9.36 million and 28.82 million tokens, respectively. Over 26 billion LUNC tokens have been destroyed by the LUNC community as of this writing.

Despite the decrease in the on-chain tax, it is expected that the burn would grow. This is because of the increasing number of Terra Classic trades and transactions (LUNC). This means that hundreds of billions of LUNC tokens will be removed from circulation, increasing demand and hence driving up the price of the token.

Therefore, What is Driving the Price of Terra Tokens?

The v22 upgrade for LUNC validators is currently up for vote, which may account for Terra’s increase. Many believe the vote will pass since the update will restore staking to the network. Sixty-six percent of validators must approve the change for it to take effect. Online polls suggest that 69% of eligible voters have cast ballots. There is, however, no formal confirmation of this.

The project could use the boost that the vote for the v22 upgrade would provide. With the staking option active once more, Terra Terra Classic is likely to experience an upswing. Assuming the change is approved by the community, staking will restart on the Terra Terra Classic network on August 26.

In addition, LUNC burns are progressing at full speed. LunaBurnTracker reports a 34% rise in burn incidents.

🔥 Daily Burn Stats for Tue Aug 23 2022! 1,389,126 #LUNC ($145) burned! 📈 34% increase. 14 burns @ 1 BPH. 1 LUNC = $0.00010411 #LunaBurn

— LunaBurnTracker (@LunaBurnTracker) August 24, 2022

Many have likened Terra’s demise to the 2008 financial crisis and its impact on the cryptocurrency sector. Do Kwon, co-founder of Terra, spoke out for the first time since the disaster in an interview, revealing his regret at his mistaken assumptions.

At the time of writing, a coin called LUNC was trading at $0.00010120, a gain of 10.7 percent in the previous 24 hours. Similarly, LUNA was trading at $1.73, a 4.4% increase over the prior day’s close. Terra’s stablecoin USTC was also up 16.5% in the last day, trading at $0.02848968.

New Tax Burn

As intended, the Terran population has fully adopted the burning mechanism. A recent analysis estimates that the district has used almost 25 billion Terra Classic up to this point.

There was also news that Binance, the world’s largest cryptocurrency exchange, has seen huge gains in LUNC. As of their most recent weekly update, Binance has burned almost 1.34 billion Terra Classic in its fourth set of burns. The burn was reported as a transaction involving 2.68 million coins.

Binance has stated that it will back Terra’s burning mechanism. Nearly 12.5 billion LUNC tokens have been destroyed by the exchange so far in the form of trading fees on spot and margin trading pairs.

The weekly amount of LUNC tokens that Binance burns has decreased, though. That’s why CZ, the company’s CEO, proposed lowering the burning tax to stimulate more commerce on and off the chain.

Changes to the token tax burning system were recently approved by a vote in the Terra Terra Classic community. Per Proposal 5234, we lowered our fee from 1.2 percent to 0.2 percent. The new tax burn was met with widespread approval from the locals, who showed their approval by casting a large number of ballots.

Tax burn has been accepted by the Terra community to help drive up the value of LUNC. Ten billion LUNC, or 10% of the total supply, will be destroyed by the process. The effective date of the new tax burn regulation was October 19.

Terra (LUNA)  Struggles to Maintain Stability

Meanwhile, LUNA Classic’s (LUNC) Terra 2.0 equivalent (LUNA) has been experiencing stability issues. Since its release in May, following the hard fork, Terra (LUNA) has not fared well on the market. In terms of cost, the Terra (LUNA) has seen a reduction of nearly 78%.

If the negative market continues to dominate, we could see a continuation of the recent uptick in selling pressure on Terra (LUNA). Experts in the cryptocurrency industry believe that the tremendous rivalry from mooning coins like Bitgert (BRISE) and Centcex is to blame for the poor price performance of Terra (LUNA) and LUNC (CENX)..

Influence of Centcex (CENX) and Bitgert (BRISE) Coins on LUNC

LUNA and LUNC are two of the crypto coins that are facing the pressure of the widespread belief that Bitgert and Centcex (CENX) coins are the killers of many others. Bitgert and Centcex coins are competitive, as seen by the large number of LUNA and LUNC holders who have recently made purchases of these currencies.

Thus, the selling pressure on LUNA Classic (LUNC) and Terra 2.0 (LUNA) has been exacerbated by currencies like Bitgert (BRISE) and Centcex (CENX). These investors are buying BRISE and CENX because of the tremendous profit potential presented by disruptive innovations.

In the end, Bitgert and Centcex will remain formidable competitors despite the token burn, leaving Terra 2.0 (LUNA) and LUNA Classic (LUNC) in a bad position. These coins are appealing because of the large returns they could provide.