The primary Terra blockchain‘s native cryptocurrency is called Luna classic (LUNC crypto). It was introduced in 2018. The token’s name at the time was LUNA. The maximum supply of the LUNC token as of 03.03.2023, the date this article was written, is 6,860,566,678,098, and the amount of supply in circulation is 5,907,770,292,975.
What is Lunc Crypto? All About Terra’s Luna Classic
The community voted to establish a new blockchain after TerraUSD (UST), the blockchain’s algorithmic stablecoin, crashed in May 2022. After the release of Terra 2, the new network’s native coin took on the name LUNA, while the token from the previous blockchain was rebranded Luna Classic (LUNC). Terra Labs, the company that created the currency, aims to see the protocols and applications of the previous network transition to the new blockchain (Terra 2).
How Does the Luna Classic Perform?
The native token of the first Terra blockchain was intended to be Luna classic. It served as the twin token that TerraUSD, the blockchain’s algorithmic stablecoin, needed to absorb any price variations (UST). By issuing (minting) and destroying (burning) UST tokens to maintain a one-to-one exchange rate to the U.S. dollar, UST was designed to maintain a stablecoin’s supply and demand at a fixed price of $1.
Many believed the structure to be fundamentally unstable and attackable. In the early half of May 2022, UST and LUNC eventually failed, wiping out billions of dollars in investments from illustrious institutions and retail investors.
About LUNC’s Rebranding
The $60 billion failure of Terra was a nadir for the blockchain. Do Kwon, a co-founder of Terraform Labs, saw the Terra ecosystem as a blockchain-based version of the Visa payment system that also included decentralized applications (dApps) and stablecoins.
The three pillars of personal finance, lending, savings, and payments, were all expected to take place on-chain. Kwon used the algorithmic stablecoin TerraUSD (UST), which was released in September 2020, to be scalable for the widespread adoption of cryptocurrencies. Terra developed into a churning dApp ecosystem and was labeled as a potential “Ethereum killer” thanks to the LUNA-UST team.
Along with Terra’s native cryptocurrency, LUNA, UST was dynamically reducing and increasing its supply in response to market demands. Unlike other decentralized stablecoins like Dai, UST was not over-collateralized to maintain stability. UST instead relied on burning or minting LUNA.
Birth of LUNC
A beautiful and effective way to capture value, but with one major flaw: the stability of UST was dependent on the price of the intrinsically unstable coin LUNA. UST immediately came down after LUNA.
The Anchor lending protocol, which provided artificial, unstable, and Ponzi-like 20% stablecoin returns, was where most of Terra’s money was focused. The two cornerstones of the Terra ecosystem collapsed as a result of investor withdrawal from Anchor and LUNA’s price blip, wiping out investors’ life savings. Do Kwon developed the LUNC crypto and a recovery strategy in the same month.
Why the Luna Token Has Two Versions?
Do Kwon posted a suggestion titled Terra Ecosystem Revival Plan 2 on Terra’s development forum following the collapse of Terra. In his proposal, a new blockchain would be created via a fork, and new tokens would be distributed to community members according to the number of UST and LUNA tokens they held. The idea was approved by the vast majority of validators, the network’s gatekeepers, who approve transactions and exercise governance rights.
On May 28, 2022, the brand-new Terra blockchain (Terra 2) became live. Parallel to this, the outdated blockchain, commonly known as “Terra Classic,” was still operational but saw little to no activity, and there were no intentions to develop it. Following the launch, the LUNA name was transferred to the new network’s native token. The previous blockchain was still in use, but its token was changed to Luna Classic (LUNC).