The price of LUNA, the native token of popular altcoin Terra, has increased by over 10,000% to date, driven by increased demand for its algorithmically supported stablecoin USDT and token burns, which removed a significant portion of LUNA’s supply from circulation. Detail cryptocoin.com‘in.
Altcoin token exploded
Terra’s mainnet launched in April 2019, and its native token initially saw relatively quiet price performance. Earlier this year, the price of LUNA began to rise. According to DeFiLlama data, LUNA’s decentralized finance apps have $13.4 billion worth of crypto assets locked in them. Some of the DeFi demand on LUNA has to do with its algorithmic stablecoins used in apps like Anchor, Mirror, and Pylon. Mirror offered tokens reflecting US-traded stocks and launched an investigation into whether the US Securities and Exchange Commission (SEC) was selling unregistered securities.
Previously, the LUNA community approved a governance proposal to permanently burn 88 million tokens from the community pool, replacing it with Terra’s USDT stablecoin. The move helped the UST’s market cap rise from $2.9 billion at the beginning of November to over $7.8 billion at the time of writing. LUNA’s token burns were further supported by a recent upgrade that saw tokens committed to creating UST being burned rather than piled up in a community pool. More than 100 million LUNAs have already been burned.
According to some observers, the LUNA token burns, combined with staking activities that allowed token holders to earn interest on their assets while securing the network, led to a supply shock to exchanges that boosted the value of the cryptocurrency. Brian Currency, head of communications at Terraform Labs, said that “almost everything” the company does to support the Terra ecosystem “creates more demand for USDT,” which in turn has resulted in Luna’s price dynamics operating based on UST demand.
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