The Terra community (LUNAt/USD) on November 10 approved a proposal to burn 88,675 million tokens, worth more than $4.5 billion.
Terra in late October announced Proposition 44 to conduct the burning of 88,675 million LUNA tokens, worth more than $4.5 billion, representing more than 18% of the current circulating supply of LUNA. After 2 weeks of discussion, the Terra community on November 10 voted to approve this proposal, realizing the largest token burn event in the history of cryptocurrency (in USD value).
According to the plan, the burning of LUNA will be carried out in the next 2 weeks, but 520,000 LUNA has been burned on November 10. Thanks to these positive news, LUNA price made a new all-time high at 54.95 USD on the evening of 11/10, before being corrected to 44.19 USD in the market's bearish direction, and then recovered to 48.4 USD at the time of writing. Posts.
In return for the LUNA burned, Terra will issue an additional $4-5 billion stablecoin UST to provide more liquidity to the world's 4th largest cryptocurrency ecosystem with TVL over $10.8 billion. Specifically, Proposition 44 would provide funding for Ozone, an insurance protocol for Terra to “prevent technical risks” for DeFi projects built on the platform.
The risk of being attacked in the DeFi sector has been increasing in recent times, when by the end of October 2021, DeFi hacks this year have caused $1.4 billion in damage.
Even so, there is some skepticism about Proposition 44, arguing that the burning of 88,675 million LUNA is too much. However, the founder of Terra Do Kwon explained that the proposal to burn is also aimed at reducing the number of assets in the project's fund. He told CoinDesk interview:
“The fully diluted value of the project is currently close to $40 billion, so I think having too much crowdfunding would be a systemic risk. This fund should only be sufficient to pay for general services. But a DAO doesn't need billions of dollars to operate."
Token burning is the latest trend of the crypto ecosystem in the second half of 2021. Since Ethereum implemented the EIP-1559 mechanism to burn part of ETH transaction fees, other projects such as Binance Smart Chain, Cardano and Terra have both announced proposals to reduce the total token supply.
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