Terra’s Luna Classic has enjoyed a bit of a renaissance over the past week as its value rose sharply following the introduction of a 1.2% burn tax on all swaps.
The token traded as low as $0.00031131 during the week before shedding part of the gains. At press time, it is trading at $0.0002604.
Regardless, LUNC is one of the best performing cryptocurrencies in the prevailing bear market. Since its historic implosion in May, the asset is up over 25,000% in the last four months.
In the last 30 days alone, LUNC is up 160.5% and nearly 200% in the last 14 days.
For comparison, Bitcoin has lost over 13% of its value over the past 30 days, while Ethereum has lost around 4% despite the merger buzz.
The volume of the original LUNA token reached 7 trillion after the collapse of the Terra ecosystem. Token inflation eventually caused its value to collapse from over $80 to less than a cent.
Since then, the developers have turned blockchain governance over to the community, which is now trying to redeem the cryptocurrency.
Prior to the new 1.2% burn mechanism, the existing burn rate already resulted in over 3 billion tokens being retired.
In addition, the staking mechanism on Terra has contributed to the token’s price recovery. The stake rate on August 27 was 2.6% of the total supply. In the meantime, however, it has reached 7.5%.
Delivery and staking by LUNC
DELIVER
total: 6,903,857,940,124
STUCK
Bound: 474.377.170.122
unbound: 46.157.692.209
DUTY RATIO
7.540% (bound: 6.871%)
09/02/2022 08:00 UTC#MON
— LUNC staking (@LuncStaking_Bot) September 2, 2022
The 37% APY staking rewards are the main factor that attracts more players. But these high returns have similarities to unsustainable returns that caused the collapse of the original ecosystem.
Still, many are excited about the new burn mechanic, which will go live on September 12th. It will apply to on-chain swaps and exchanges like Binance and KuCoin.
As soon as the burn mechanism takes effect, depending on the trading volume, this could lead to the burn of almost half of the supply within a few months. However, there are many variables that affect how effective the combustion mechanism would be.
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