A Luna burn is one proposal suggested to help in Luna’s recovery, and since the token’s crash, several holders wanted Luna burn to reduce its supply and also increase its value by creating more scarcity.
However, the Terra governance system has voted, and as a result of the vote, all of the Terra USD (UST) tokens held in the project’s community pool, as well as UST deployed for past liquidity incentives on Ethereum will be burned.
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According to CoinGecko, the amount of Terra USD to be burned will be more than 1.3 billion UST supply, which is about 11% of the existing 11.2 billion UST supply. The burning proposal received 99.3% of the vote, and Terra labs will be left with no option but to proceed with the burning.
The burning process will happen in two phases. Firstly, it will send about 1 billion UST from Terra’s community pool to a burn module, where it will be permanently removed from the supply. Furthermore, the team will manually bridge back 370 million UST to Terra from the Ethereum blockchain and destroy them.
Earlier this month, the dollar-pegged algorithmic stablecoin UST plummeted from $1 to 0.04 cents before slightly recovering to $0.07, where it trades now. This represents a 93% drop from its value prior to the fall from dollar parity.
The approval of the UST burn comes a day after Terra governance also approved Terraform’s revival plan to re-launch the Terra blockchain and create LUNA 2.0 tokens.
The Luna 2.0 launching will go live today, May 27, and the airdrop will happen on the 28 May on exchanges that support the revival plan. The airdrop will be available to Terra-based digital assets
However, the new Terra blockchain will exist without the UST tokens, and their use will be restricted to the original blockchain.
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