Yesterday, Binance announced that it had begun to burn LUNC (Luna Classic). All LUNC tokens that were collected from trading fees have been destroyed by the exchange, turning $1.8 million worth of the digital currency into rubbish.
Luna Classic is the new name given to the Luna cryptocurrency following the implosion and birth of the new LUNA currency. The value of LUNC (when they were still known as Luna) was $86, but by the middle of May, its value had nearly fallen to zero. It even fell below $0.01. The explosion in tokens in circulation was another factor that caused this rapid implosion.
Luna’s supply wasn’t fixed. It was actually variable algorithmically to maintain the stablecoin’s value. The system crashed and a large number of Luna tokens were created. In a matter of one week, it went from 345 million to more than six trillion moons.
The market value of the tokens was literally destroyed, effectively eroding the Terra ecosystem. The Terra team created a new ecosystem with the same name in May. Terra Classic was renamed Terra Classic and the old cryptocurrency was renamed Luna Classic. A new team assumed its management.
One initiative was to try to reduce the enormous supply by burning tokens. Currently, out of more than 6.9 trillion LUNC, only 6.890 billion are in circulation. This is due to the burn process. This includes more than five billion LUNC that Binance just burned.
Even though the amount sounds large in numbers, it is actually less than 0.08%. This means that the impact of this fire on the cryptocurrency supply is minimal.
Moreover, only 0.14% have been used to date, which is a small percentage. Not all LUNC tokens in circulation are available on the market. Many of these tokens are locked so the impact of burning tokens in the market is greater.