On Tuesday, the Terra community accepted a popular proposal that suggested burning 88.7 million LUNA. At current prices, that amount is worth roughly $4.5 billion. The proposal also includes the issuance of 4-5 million Terra USD (UST) stablecoins to provide an additional boost to the altcoin project. Details cryptocoin.com‘in.
Terra permanently removed 520,000 LUNA tokens from circulation
Terra is the fourth largest smart contract platform with a TVL value of 11.36 billion, according to DeFi Llama. LUNA is part of Terra Blockchain’s algorithmic balancing system that allows stablecoins to be pegged 1:1 with fiat currencies. On Tuesday night (November 9), Terra permanently removed 520,000 LUNA tokens from circulation. The rest of the tokens are scheduled to be burned within the next two weeks.
Altcoin project Terra launches LUNA token burn
The token burning mechanism was initiated by Terra co-founder Do Kwon. It aims to financially support new services on the stablecoin payment platform, such as the ozone insurance protocol. According to a statement from Kwon, Ozone “facilitates leveraged coverage of technical failure risks” in any DeFi protocol built on Terra. Additionally, according to Terra’s official Twitter account, the burn is one of the largest in the history of major layer-1 projects.
Messari research analyst Ryan Watkins explains where the capital will be used:
Most of the burning ($1 million and more) will go towards capitalizing a new insurance protocol for the Terra ecosystem called Ozone. This is an important part of the ecosystem that should promote greater security for users.
DeFi industry grappling with cyberattacks
The Rekt database recently revealed that more than 50 attacks have sprung up on DeFi protocols in the past two years. What’s more, nearly $1.7 billion has been lost from DeFi vulnerabilities over the past five years. These are some of the problems Terra hopes to solve with Ozone. However, some doubts have arisen about the token burning mechanism as illustrated on the proposal’s page. Some users question whether it’s too much to destroy around 89 million.
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