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Terra Investors Not Giving Up On Luna Classic (LUNC).
Despite the massive collapse of the Terra ecosystem tokens UST and LUNA, many investors are still not prepared to give up as they launch significant moves to help the assets rally again.
The moves made by these diehard investors have been helpful in the past few days, with both crypto assets boasting significant gains so far.
Over the last seven days, Terra Luna Classic (LUNC) has been up 113%, while TerraClassicUSD (USTC) has surged by 527%.
The tremendous growth in these tokens comes on the heels of concerted campaign efforts by the community to burn a huge portion of the LUNC 6.5 trillion circulating supply.
Terra’s Flawed Design
The massive difference in the surge of both cryptocurrency assets within the past seven days stems from the design of the Terra project, which was heavily criticized by Changpeng Zhao, the founder, and CEO of the world’s largest crypto exchange Binance.
Terra 1.0 blockchain is designed in a way whereby the supply of LUNC and USTC tokens are automatically adjusted based on the value of each cryptocurrency.
For instance, when the value of the old algorithmic stablecoin plunges below $1, UST supply will be burnt by minting $1 unit of the LUNC token, and also entails a swap fee that will be paid in Luna Classic.
The initiative helped maintain the UST peg to the dollar via the reduction of the stablecoin supply. Meanwhile, the opposite will occur if the stablecoin value exceeds its $1 peg.
With both tokens connected to each other, any action carried out by investors on one directly affects the other positively or negatively.
USTC Opportunists Frustrate LUNC Investors
LUNC investors are trying to boost the value of their Luna Classic holdings by burning a huge chunk of the cryptocurrency. Also as a major development the StarShip Universe project accepted LUNC as Payment, with1.2% of All LUNC Payments To Be Burnt.
While these actions have gone smoothly, their actions are being hampered by opportunists invested in USTC, who continue to get more gains as LUNC holders burn more of their tokens.
“If you just buy USTC you force LUNC holders to burn the supply to increase the price of their holdings….which is how it’s designed. Then you can just capitulate to your USTC holdings (which will likely lead to more de-pegging, but again…how it’s designed),” a Twitter user shed more light on the development.
If you just buy USTC you force LUNC holders to burn the supply to increase the price of their holdings.
…which is how it's designed.
Then you can just capitulate your USTC holdings (which likely leads to more de-pegging, but again…how it's designed)
— rêve is a scrapyard titan (@wrapped_dday) June 27, 2022
Terra’s Collapse
Recall that after the collapse of Terra tokens, the team behind the project created a new chain of tokens to compensate investors for their losses. The old tokens were renamed Luna Classic (LUNC) and TerraClassicUSD (USTC), respectively.
Despite the fact that new Terra tokens have been airdropped to investors, popular exchanges have continued to support the old Terra tokens on their platform.