LUNC Surged: Could Terra Stage a Comeback?
On September 15, it was reported that South Korean prosecutors issued arrest warrants for Do Kwon and other Terra founders. Interestingly, before the news came out, both LUNA and LUNC soared. In particular, LUNC skyrocketed by nearly 600% in three weeks, and LUNA surged almost 500% in two weeks. Following the news, both cryptos plummeted, with LUNC falling by 32% and LUNA down nearly 35% on September 12.
LUNA and LUNC are both new coins launched after the Terra meltdown. Specifically, LUNC (Terra Classic) is the original LUNA, while LUNA is a new coin called Terra 2.0.
Let’s then discuss the reasons behind the LUNC surge. In early August, Terra Classic announced in its social media group that it plans to migrate 33 projects onto the chain. Meanwhile, proposals to burn and reactivate coin delegation and staking have been passed.
The proposals will introduce a 1.2% tax burn for on-chain transactions of LUNC and USTC until the total supply of LUNC tokens drops to 10 billion. At this point, the LUNC price did not surge or plummet.
On August 22, LUNC DAO announced that Terra Classic will roll out LUNC staking and burning. There are also rumors that 66% of the nodes on the chain will support the plan. The news sent LUNC soaring, and the price skyrocketed by nearly 20%. However, the market has not responded to the two functions, which went live on August 28, with much enthusiasm, according to the on-chain statistics.
LUNC DAO tweeted that the burning proposal could bring the LUNC price back to $1. Following the tweet, in early September, Edward Kim, a member of the LUNC community, brought up the burning proposal once again and called on all nodes to adjust the default burning coefficient to 0.012. Later on, Edward Kim disclosed that the burning proposal could be implemented as early as September 20.
Subsequently, centralized platforms including Kucoin, Gate.io, and Bit.com announced that they will support the LUNC tax burn and will directly deduct the 1.2% tax when users deposit and withdraw LUNC.
Although the proposal has gained support, some investors also worry whether these CEXs would really destroy the 1.2% tax and if their tax deduction would become an additional trading fee.
Apart from that, LunaticsToken, a BSC-based token related to LUNC, also announced on September 2 that they had burned 2 billion LUNC that’s worth $580,000 in the past six weeks.
Despite the doubts, the market has rooted for deflation as it always does, which allowed LUNC to surge, peaking at $0.00059. Meanwhile, this also helped LUNA grow. All of a sudden, crypto users started to discuss a possible LUNC comeback.
That said, fundamentally, nothing has changed for LUNC. A deflationary mechanism of 1.2% is a drop in the bucket for LUNC’s huge volume because the coin suffers from poor liquidity. According to the on-chain analyst Light, the 10-day volume of LUNC since September 1 stands at $370 million, which means $4.5 million was burned. Meanwhile, on CEXs, the amount burnt was only $55,000.
As a blockchain, Terra Classic hasn’t been active, and the short-term price surge has nothing to do with changes in its basic ecosystem. Instead, the price went up because of market hyping, which will not last. According to CoinEx, the LUNC price has fallen back to $0.0002840, down nearly 50%.
It is hard to say as to whether LUNC could achieve another boom, but some already refer to LUNC as the next Shib. To them, although LUNC is backed by a strong community, the ecosystem suffers from poor liquidity and will eventually become a ghost chain.
Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.