Following a declaration by Binance, the largest cryptocurrency exchange in the world by volume, that it would enable a burn mechanism for the network, Terra Classic (LUNC), the original cryptocurrency token of the Terra-LUNA blockchain that crashed back in May, increased by over 50% on Tuesday.
LUNC was trading up 53.3% over the previous 24 hours to trade at US$0.0003029. This is still a far way from LUNC’s record high of US$119 in April, when it was one of the top ten cryptocurrencies by market value, and the multi-billion dollar failure of the Terra-LUNA stablecoin project in May.
According to the statement, Binance’s new system will transfer all trading fees for LUNC spot and margin trading pairs to a specific LUNC burn address for burning. Each week, the precise quantity to be burned will be updated.
To “burn” a token in the crypto business is to effectively destroy it in order to remove it from circulation with the intention of increasing or stabilizing the token’s price by lowering the supply.
The decision by Binance is in line with another strategy adopted by the LUNC community that went into effect on September 21 and involves burning 1.2% of each LUNC transaction made on the blockchain. 6.1 billion LUNC tokens have been destroyed since that point.
As Binance has very low transaction fees, some industry observers have pointed out this move will have little impact on the token’s price overall. Customers of Binance have the option to participate in the 1.2% burning process.
As the community’s burn plan was disclosed, LUNC climbed almost 180% earlier in the month to hit US$0.0005888, the token’s highest price since May’s collapse, before continuing to decline in value before making huge gains on Tuesday.