The Terra Luna Classic (LUNC) community has voted overwhelmingly, with nearly 60% in favor, to cease the minting and reminting of Terra Classic UST (USTC) tokens. The drastic decision, in a decisive move aimed at rescuing the beleaguered Terra Classic stablecoin, comes in the wake of Terra’s collapse in May 2022, which had sent shockwaves through the crypto market, leaving USTC’s value in shambles.
The proposal to halt USTC minting and reminting is part of a comprehensive plan to facilitate the re-pegging process of the stablecoin. To accelerate this process, members of the Terra Classic community are actively encouraged to participate in the burning of USTC tokens, effectively reducing the token’s circulating supply.
Before the catastrophic events of May 2022, Terra’s blockchain network allowed users to seamlessly swap between USTC and LUNA, Terra’s native cryptocurrency. However, as the network crumbled and USTC lost its peg to the US dollar, the system began minting LUNA coins in a desperate attempt to restore stability.Â
This emergency measure led to an oversupply of LUNA tokens and a cascading effect on its price, dragging USTC’s value far below its intended $1 mark.
Terra Luna Burning Challenge
The community’s primary objective with this proposal is to expedite the burning of LUNA tokens, ultimately driving up their value. The burning process, where tokens are permanently removed from circulation, has been sluggish so far, with only 75 billion LUNC tokens successfully incinerated. This leaves the circulating supply at approximately 5.9 trillion LUNC, out of a total supply of 6.84 trillion.
As more LUNA tokens were minted to restore the USTC peg, the oversupply put immense downward pressure on LUNA’s price. Consequently, USTC’s value suffered a steep decline from its initial $1 valuation.
Accumulation Signals Amidst Uncertainty
Despite the tumultuous journey thus far, there are positive indicators that offer a glimmer of hope for the Terra Luna Classic community. According to CoinGecko, the current price of LUNC stands at $0.00006150, reflecting a 2.9% increase in the past 24 hours and a promising 6.6% surge over the past seven days.
Key momentum indicators observed within a 24-hour window show signs of approaching overbought levels. LUNC’s Relative Strength Index (RSI) stands at 53, indicating moderate strength, while its Money Flow Index (MFI) is at 76, suggesting robust accumulation. This shift in sentiment indicates that the community’s efforts to restore value may be gaining traction.
The Terra Luna Classic community’s bold decision to halt USTC minting and reminting signifies a concerted effort to revitalize the ailing stablecoin. With a renewed focus on burning LUNA tokens and correcting the supply-demand imbalance, the community aims to steer USTC back on course towards its $1 peg, providing a glimmer of hope amidst a challenging journey of redemption.
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