Terra to burn 1,3 billion UST stablecoins

More than 99% of the community members voted to burn stablecoins

27.05.2022 - 07:25

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What’s new? The Terra blockchain will burn 1,3 million UST stablecoins, representing about 11% of the number of coins in circulation. UST from the community pool will be liquidated, as well as coins previously deployed on the Ethereum network to stimulate liquidity. The decision was made in a vote on proposal 1747, which was supported by more than 99% of community members.

Proposal 1747

More details about burning tokens. The burning of stablecoins will take place in two stages. First, about 1 billion UST from the community pool will be sent to the module for burning. After that, the project team will move 370 million UST from the Ethereum blockchain back to the Terra network and liquidate them.

Cryptocurrency burning is the process of removing a certain number of tokens from circulation, after which they become permanently inaccessible. Often burning is carried out in order to increase the rate of an asset or prevent it from inflation. Burning can be done by sending tokens to a wallet without a private key, by conducting a hard fork, using special software, or using algorithms that destroy some of the funds during transactions.

What happened before? On May 23, Terraform Labs CEO Do Kwon said that the burning of LUNA tokens would not help restore the ecosystem and would only result in holders losing their assets. Despite this, he provided a wallet address for the burn of the coins.

The Terra 2.0 network will be launchedon May 27. Based on two snapshots, “pre-attack” on May 7 and before the launch of the new blockchain, the new tokens will be dropped. The old network will be called Terra Classic (LUNC), with the LUNA ticker will be transferred to the new token.

The Financial Supervisory Service (FSS) of South Korea would audit Terraform Labs. The FSS said that the main purpose of the audit is to prevent the damage from the rate collapse of UST and LUNA from spilling into the financial markets.

For a detailed timeline of the Terra ecosystem collapse, see GetBlock Magazine’s article.

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