- Prominent LUNC chain validator sets up two proposals to burn LUNC & USTC.
- The original token issuer, TerraForm Labs, has been ordered to seize business by the SEC.
- LUNC validator dives deep into the affiliated protocol wallets to find a lump sum.
TerraForm Labs has agreed to wind down its business as soon as practicable to qualify for Chapter 11 bankruptcy protection in the United States. As the investors affected by Terra Lunaโs system crash in May 2022 are filling up their crypto claims, Terra Luna Classic (LUNC) faces a crucial turning point.
Terra Luna Classicโs Biggest Burn Ever?
According to the bankruptcy lawsuit court filings, TerraForm Labs should close its business by the end of October 2024 and eliminate all assets originally issued. After this date, TerraForm Labs wonโt be able to access any digital funds on Columbus-5 or Phoenix-1-based chains.
โThe judgment requires the defendants to burn or destroy private keys in TerraFormโs possession to wallets or blockchain assets holding UST, MIR, LUNA, Wrapped LUNA, and LUNA 2.0,โ reads the concluding statement from the U.S. Securities and Exchange Commission (SEC).
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Recently, TerraForm Labs was forced to reopen the Shuttle Bridge, which was shut down during the gloomy days of Terra Lunaโs UST de-pegging back in May 2022. The temporary reopening of this DeFi protocol enabled users to redeem the wrapped assets on LUNC as a part of the courtโs directive.
According to Terra Finder’s on-chain data, the community has successfully reclaimed 2.58 billion LUNC tokens from the Shuttle Bridge so far.
Hereโs How Much LUNC Can Be Burned
As the $4.5 billion settlement in the legal case against TerraForm Labs obliges the Web3 company to seize its business, the assets in protocols such as Anchor or Mirror are bound to be burned soon. According to popular YouTuber and LUNC validator HappyCatKripto, four known wallets are tied to the Mirror protocol, which holds above 500M tokens.
Paired with the funds on Anchor protocol, the Terra Classic tokens waiting for the incinerator pile up to a hefty 275 billion coins, or roughly $22 million. This potentially opens doors for the most grandiose LUNC burn, with a quarter of a trillion Terra Luna Classic tokens in one go.
โGetting those burns early will really provide the momentum we need,โ spills out HappyCatKripto. Naturally, a burn of this magnitude would play out favorably in further coordination with Binance and other exchanges dedicated to the chainโs restoration efforts.
To achieve this, the validator urged the community to migrate Mirror and Anchor protocol contracts to a new code using a governance model similar to Risk Harbor. While both governance proposals are open for voting and discussion, the timeline of this grandiose burn has yet to be decided.
On the Flipside
- The other asset in question is Terra Classic USD (USTC), renamed from UST after the algorithmic stablecoin dramatically de-pegged during the 2022 system crash.
- Navigating Mirror protocol, there are 177M USTC tokens to be burned, while all TFL protocols combined display around 1 billion USTC that could be eliminated from circulation.
Why This Matters
Efficiently eliminating the overprinted supply helps maintain the long-term stability of a cryptocurrency.
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