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What is Luna Classic? What you need to know about LUNC, a one-time high flyer on comeback trail

By Ankish Jain

Edited by Jekaterina Drozdovica

10:00, 9 October 2022

LUNC Terra Luna blockchain abstract background digital cryptocurrency
What you need to know about LUNC, a one-time high flyer on comeback trail Photo: Yoann184 / Shutterstock

Luna Classic (LUNC), formerly one of the market’s most sought-after cryptocurrencies, has been making strides toward a comeback. Lately, it suffered through volatility and continued attracting a fair amount of trading volume.

The old luna crypto reached an all-time high of $119.18 in April 2021, but plummeted to an all-time low of $0.00001675 on 13 May amid the LUNA-UST meltdown that sparked widespread panic in the cryptocurrency markets.

Fast-forward to September 2022, and  it appears that LUNC may have regained the momentum, hitting a 90-day high of $0.0005888 on 8 September, up 3,415% from its May low. By October, some of these gains were lost, with LUNC trading at $0.0002918 as of 7 October, down over 40% from the September high.

Luna Classic coin has undergone several protocol shifts, including changes to its burn mechanisms aimed at reducing the circulating supply of more than six trillion tokens. Yet what is Luna Classic and what is LUNC coin today? Here we take a look at the coin and what has changed since the Terra system collapse. 

What is Luna Classic and how does it work?

Do Kwon and Daniel Shin, two digital entrepreneurs from South Korea, established Terraform Labs in Seoul in 2018.

The Terra protocol was aimed at developers creating decentralised finance (DeFi) projects. The blockchain was operated by a dual-token system of LUNA and UST. 

LUNA served as the network's staking and governance token, allowing users to participate in governance, become validators, and receive incentives.

On the other hand, TerraUSD (UST) was a stablecoin pegged to $1 using a series of algorithms involving LUNA. Instead of being backed by physical assets, the value of the algorithmic stablecoin was determined by an underlying system of rules and smart contracts.

Since Terra employed a two-token system, UST and LUNA were companion tokens. An equivalent number of LUNA were burnt for each new UST created. 

As a result, one UST coin could be exchanged for one dollar's worth of LUNA and vice versa. LUNA was crucial in maintaining the value of the UST and reducing market volatility. It also provided traders with arbitrage incentives meant to maintain the US dollar value of the UST currency.

In May 2022, the Terra ecosystem collapsed as UST de-pegged from the USD. To keep its peg, the algorithm relied on the supply of UST and Luna. UST was created by burning – or destroying – Luna, which was utilised to reduce Luna's supply to raise UST's supply and vice versa.

This did not always operate well during strong volatility, and UST could occasionally drift away from the US dollar for a limited period. Nothing, however, was ever as terrible as the May collapse. Massive amounts of UST were sold off in mass panic, having a knock-on effect on LUNA price, which crashed.

Since then, LUNA and UST suffered a relentless downtrend, slumping to all-time lows and being delisted from cryptocurrency exchanges. 

To revive the project, Kwon devised a resurrection plan for the Terra ecosystem and the blockchain underwent a hard fork with the creation of the Luna 2.0 network. The old LUNA token was rebranded as Terra Classic (LUNC), while a new LUNA token was born within the new chain. The developer community continued creating decentralised applications (dApps) and offering utility for the new coin, while any dApps developed for Terra Luna will also be prioritised for LUNA 2.0. The project abandoned the use of the algorithmic stablecoin.

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LUNC coin price history

LUNC's initial coin offering (ICO) concluded in March 2019 with a token price of $0.80, according to ICO Drops.  From its introduction in early 2019 until early 2021, the LUNC/USD pair traded in a tight range. The LUNC value increased by a whopping 2,342% in 2021, from $0.90 on 24 January to $21.98 on 21 March 2021. The cryptocurrency market as a whole enjoyed a bullish run during this period, and several coins hit new all-time highs.

SOL/USD

172.88 Price
-0.760% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

BTC/USD

66,757.45 Price
-0.870% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

ETH/USD

3,489.87 Price
-0.890% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

XRP/USD

0.60 Price
-0.380% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

Between March and December 2021, LUNC saw a strong bull run with several pullbacks reaching a high of $99.72 on 26 December, up 2,332% from the May low. It closed 2021 at $85.47.

LUNC to USD price chart, 2019 - 2022

In 2022, investor sentiment shifted and wider cryptocurrency markets witnessed a downward trend. By 30 January, LUNC was trading at $46.27, down almost 53% from its all-time high in December.

After losing steam, Luna classic price rallied to an all-time high of $119.18 in April 2022. However, after the collapse of LUNA-UST on 13 May, the token crashed to an all-time low of $0.00001675.

After a disappointing summer, LUNC seemed to regain momentum between August and September, gaining almost 580% from the low of $0.00008666 to the high of $0.0005888. As of 7 October, LUNC was trading at $0.0002918 and had a market capitalisation of $1.79bn.

Luna classic news and price drivers

The circulating supply of more than six trillion LUNC coins has a detrimental effect on the token price. As a result, Binance, the biggest cryptocurrency exchange in the world, is now burning all trading fees collected from LUNC trading

The burn commenced on 21 September and, according to the exchange, almost $1.8m has been burned so far, which amounted to 5.6 billion LUNC tokens as of 7 October. The burn will continue indefinitely, with Binance reporting on the process weekly.

Further, the Terra community has sanctioned a 1.2% tax burn on all LUNC on-chain transactions on the Terra Classic network by voting in favour of proposals 3568 and 4159.  The Tax Burn mechanism will be used to lower the overall LUNC supply and will continue until the total amount of LUNC in circulation hits 10 billion. This mechanism will be deactivated afterwards, and the overall supply will stay constant at 10 billion. 

As the supply of LUNC will get limited in the future due to burning, this could be a positive development for the coin’s price. Meanwhile, the popular cryptocurrency exchange KuCoin supported the 1.2% tax.

It was also reported by Bloomberg that Kaj Labs, the creators of Lithosphere, a cross chain dApp portal powered by artificial intelligence, would burn 2.5 trillion LUNC in their new Finesse series of games and have facilitated between $50m and $100m to do so. By doing this, Lithosphere's core developers want to speed up the burning process while also bringing gaming functionality to LUNC. This could cut LUNC production significantly, driving up the price.

The LUNC community reacted differently to the announcement, with LUNCDAO calling it "dishonest marketing" to generate publicity.

Lunna Classic pros

  • Strong community: Luna Classic is supported by a large network of stakeholders who are still going to great lengths to resurrect the project after its collapse in May 2022.

  • Suite of dApps: According to the Terra ecosystem's website, various dApps protocols are built on it. The most common applications include gaming, the metaverse, DeFi and non-fungible tokens (NFTs).

Lunna Classic cons 

  • Lack of trust: The Terra project has suffered a significant loss of trust. The crypto sector is already quite saturated, with several well-established platforms and a lot of developer activity, making it difficult for Luna to thrive in the long term.

  • Minimum utility and high volatility: LUNC's lack of utility makes it more volatile and appealing to speculative traders. Jumps in its price can be followed by crashes as investors seek to take profits rather than hold due to the project's perceived lack of long-term worth.

The bottom line

Keep in mind that cryptocurrencies are high-risk assets. Always conduct your own due diligence before trading, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis

Remember that past performance is not a reliable indicator of future results. And never trade with money you can't afford to lose.

FAQs

What is Luna Classic worth?

As of 7 October, LUNC was trading at $0.0002918 and had a market capitalisation of $1.79bn.

How many Luna Classic coins are there?

According to CoinMarketCap data, the supply of LUNC was hard-capped at 6.9 trillion tokens, as of 7 October, with a total circulating supply of 6.15 trillion coins.

Is Luna Classic a good investment?

LUNC's price action has been very volatile, with bouts of "pumps and dumps" since reaching an all-time low in May 2022, making it a fragile cryptocurrency. Better options with a competent team and a clean track record are available on the market. Whether the LUNC token is a good fit for your portfolio depends on your circumstances and risk tolerance. Consider making your own research and analysis before making any trading decisions. You should never trade or invest money you cannot afford to lose.

 

Markets in this article

LUNA2/USD
LUNA2.0 to USD
0.4522 USD
-0.0107 -2.370%

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