Terra Luna Classic (LUNC) is up 170% this week. Is the project alive again or is this a one-time uptick?
There is news and there is rumor. The news is that with each transaction 1.2% is taken out of circulation.
Rumor has it that LUNC is slated to be listed on Robinhood, but this has not been confirmed.
Terra Luna Classic gets major boost
Below the share price of LUNC this week. The chart comes BLOX and shows that the price has risen 170% from low to high. At the time of writing, the cryptocurrency is trading for 0.00025 euros.
That sounds totally fantastic, but the moon was really achieved in April, when LUNA traded for 106 euros, its highest value ever.
Terra: from hero to zero
Terra was praised for buying a lot of bitcoin to keep their stablecoin at value. The stablecoin was largely kept at value by its link to LUNA. If UST was worth less, Terra bought LUNA and if UST was worth too much they bought LUNA.
But a month later the whole house of cards collapsed and LUNA lost 99.99% of its value. Do Kwon, the CEO of Terraform Labs and responsible for the collapse, quickly set up a new Terra blockchain. The failed coin was renamed Luna Classic and it has soared this week.
So the coin formerly called LUNA is now called LUNC (classic). There is also a LUNA 2.0, but that is not what this article is about.
Proposals to revive Luna Classic
However, since Terra’s blowout in May, efforts to revive the original blockchain have barely gotten off the ground. In June, proposed to burn some of the transaction fees and increase the rewards for nodes. Curiously, this proposal came from the community, and not Terraform Labs; they had already abandoned blockchain at that point.
In addition, there was another proposal, to 1.2% of all tradable coins to be removed from circulation.
All the while, LUNC, the currency of Terra Classic, continued to trade. Liquidity collapsed like a pudding, and if one of the few active developers had something to report, it was immediate cause for volatility.in the Terra Classic ecosystem were enough to fuel speculation.
Tax on Terra Classic
And now for the reason why the stock price rose so much just this week. Edward Kim submitted a proposal to impose a 1.2% tax on every transaction. In his post on the Terra Classic forum he explains the possible advantages and disadvantages of such an update and invites discussion from other community members.
But what exactly does burning and taxing Luna Classic transactions hope to accomplish? How can the community enforce the tax on large exchanges? No answers have been found for this yet.
Little impact on stock price
The idea of taking crypto out of circulation is not new, and the concept behind it is dead simple. If the supply decreases, and the demand remains the same, the price rises. At least, that’s the theory.
In practice, this has little impact on actual supply and demand. And for many coins that use such a mechanism, you don’t really see the price rise either. For many projects (such as BNB) it is mainly a piece of marketing that might appeal to novice crypto investors.
Most transactions on exchanges
Hopefully there are not many new investors who fall for Luna Classic’s story. Yes coins are being taken out of circulation, but that is only when you send tokens from wallet A to wallet B.
In fact, the trading is mainly done through parties such as BLOX, Binance and Kucoin and there transactions are not credited to LUNC’s blockchain. It happens in a closed system and it is inconceivable that Edward Kim and his can talk these parties out of taking coins out of circulation.
The community of Luna Classic is trying though, they have petitioned Binance to implement the 1.2% tax on the exchange.
A warning for new crypto investors: watch out for promises of projects. Luna Classic is not contributing anything (anymore) to the crypto-ecosystem. Yes, the price may get another pump, but after that it’s waiting for the inevitable dump.