What is Terra Luna Classic (LUNC)? Project overview

Project mission

Terra is a blockchain protocol designed for global payment systems. It leverages stablecoins pegged to fiat currencies to facilitate seamless transactions. The project was created by Daniel Shin and Do Kwon, who devised a system that ensured the stability of the stablecoins through the use of Luna, the native token, and an automated algorithm that regulates the issuance and burning of the tokens.

In 2018, Terraform Labs embarked on the creation of a promising blockchain, which was officially launched in 2019. Founders Daniel Shin and Do Kwon envisioned the project as an effective tool for driving mass adoption of blockchain and cryptocurrencies. The guaranteed peg of stablecoins to fiat at a 1:1 ratio, along with the user-friendliness, was intended to attract users regardless of their level of knowledge in the Web3 space.

Terraform Labs has been particularly focused on expanding its global business. The company's leadership had ambitious plans to transform their startup into a full-fledged fintech platform and compete with major global payment systems like Visa and Mastercard. To achieve this, Terraform Labs initiated collaborations with local payment systems, particularly in the Asian market, and even formed the Terra Alliance, which included blockchain lobbying firms. 

In May 2022, the ambitious plans of the Terra platform were shattered when the TerraUSD (UST) stablecoin lost its peg to the US dollar. This triggered a collapse of the entire ecosystem and a massive crash in both the stablecoin and Luna token. The reasons for the event remain unknown, and both Daniel Shin and Do Kwon deny any allegations of fraud from users, regulators, and law enforcement, referring to it as a “fatal accident.” Notably, Do Kwon attempted to evade prosecutors and the police, as his lawyer conveyed a message of non-cooperation in August 2022.   

Following the collapse, Terraform Labs decided to launch a new network to fix the catastrophic situation. The original Terra blockchain was renamed Terra Classic, and its native token became Terra Luna Classic (LUNC).

Currently, the Terra blockchain is positioned as an evolving and secure Web3 ecosystem that brings together DeFi, gaming, and NFTs. The platform's native cryptocurrency is Luna, which is used for mining and system governance. 

Fueled by a passionate community and a deep developer talent pool, the Terra blockchain is fully community-owned and built to enable the next generation of Web3 products and services,” as stated on the terra.money website

Key facts about Terra Luna Classic (LUNC)

Purpose

Terra Luna Classic (LUNC) is the native token of the original Terra blockchain. It was used to compensate for the price fluctuations of the blockchain's algorithmic stablecoins and as a reward for community members.

The developers had a key goal in mind: to shift the volatility from TerraUSD (UST) and other stablecoins to LUNC. To achieve this, the following mechanism was implemented:

• When the network experiences an increase in transaction volume and a rise in demand for stablecoins, additional LUNC tokens are minted;
• When user activity decreases, a certain amount of LUNC is burned.

According to the creators, the main goal of the automated algorithm was to ensure the stability of stablecoin rates and guarantee top-notch safety for users.

Community members were able to use Terra Luna Classic (LUNC) for staking and were rewarded based on the amount of coins they locked up. Token holders were also given the ability to participate in governance and influence the development of the ecosystem.

Supply and distribution

Initially, the company issued 1 billion Terra Luna Classic (LUNC) tokens. The first access to tokens was given to investors representing the largest cryptocurrency exchanges, including Binance and Huobi. As a result of the sale, which ended in August 2018, developers were able to raise $32 million.

385,245,974 Terra Luna Classic (LUNC) tokens were issued for free trading. They were distributed as follows:

• 10% – Terraform Labs;
• 20% – employees and participants;
• 20% – Terra Alliance;
• 20% – reserves to maintain stable cryptocurrency value;
• 26% – sponsors;
• 4% – genesis liquidity.

Current market situation

In the midst of the growing popularity of stablecoins and investors searching for alternatives to Ethereum, Luna displayed rapid growth. However, unexpectedly in May 2022, TerraUSD (UST) lost its peg to the dollar, and LUNC entered a hyperinflationary spiral, losing more than 95% of its value. Prior to Terra's crash, the coin was trading at $100 or higher, its value has now plummeted to less than $1. 

According to coinmarketcap.com, as of the time of writing LUNC is currently ranked 57th in the list of virtual currencies by market capitalization. With a circulating supply of 5,905,249,228,236 Terra Luna Classic (LUNC), the coin is trading at $0.0001475. The market capitalization of the asset reaches $871,342,098, with a daily trading volume of $64,226,569. Despite experiencing a significant drop in value, LUNC still remains a player in the crypto market.