12 Nov 2021 Josphat Kariuki
Terra (LUNA) Records An All-Time After A Massive Token Burning Event
Terra (LUNA) managed to record a peak value of $54.77 on November 8, after announcing that its community approved the burn of approximately 88.7 million LUNA tokens, equaling $4.5 billion in value.
Furthermore, LUNA’s community also passed on the minting of around 5 million Terra USD stablecoin tokens, which would act as an added boost to the Terra project.
According to data from DeFi Llama, Terra is currently the fourth-largest smart contract project, having a total value locked of $10.83 billion. Terra is an integral part of an advanced algorithmic balancing system, which ensures all stablecoins on Terra’s blockchain are pegged 1:1 with fiat currencies.
The 88,7 million LUNA tokens are scheduled for burning over the next couple of weeks, while the network saw the first batch of 520,000 LUNA tokens already removed from circulation on November 9.
The burn pushed LUNA’s price up to a new all-time high, but quickly corrected, currently sitting at $48.43 per token. However, LUNA’s year-to-date performance is remarkable – LUNA started its journey in 2021 at a price point of $0.65 per token, only to spike a little less than $22 three months later. After a consolidation period from March to the middle of May, Terra plummeted to a price level of around $6 per token and kept this pace until the end of July. It has been mostly an uphill race for LUNA’s price so far, despite experiencing heavy corrections in September and October.
Terra’s co-founder Do Kwon pushed the proposition of adding a burning mechanism to the network. The burning mechanism would support new services on the stablecoin payments platform like the Ozone insurance protocol.
Kwon explained that the Ozone insurance protocol “facilitates levered coverage of technical failure risks” in DeFi apps on Terra. The burn may be considered as one of the largest in the layer-1 protocols, as posted by Terra’s team.
“A large portion of the burn – $1 million and more – will go towards capitalizing a new insurance protocol for the Terra ecosystem called Ozone. This is an important piece of the ecosystem that should promote more safety for users.” Ryan Watkins, research analyst at Messari, emphasized.
The security aspect in decentralized finance became a hot topic, especially with the newest attacks on DeFi protocols.
Over the past couple of years, more than 50 attacks have been conducted on DeFi platforms, highlighting the need for an insurance protocol.
“At the fully diluted market value of the network at almost $40 billion, I think having a community pool that is too large is a systemic risk,” Kwon said.
“I believe community funds should be just large enough to pay for public services. … But a DAO doesn’t need billions of dollars to operate.” Terra’s co-founder added.Blockchain Cryptocurrency Crypto Market crypto market monitoring cryptocurrencies cryptocurrency news Stablecoin Blockchain News Stablecoins