Terra Classic is one of the best-performing digital assets in the last four months.
Terra Classic enjoyed a bit of a renaissance last week as its value saw a significant rise following the introduction of a 1.2% burn tax on all exchanges.
The token traded as high as $0.00031131 for the week before losing some of the gains. At press time, it is trading at $0.0002604.
Regardless of this, LUNC is one of the best-performing cryptocurrencies in the predominant bear market. Since its historic implosion in May, the asset has risen more than 25,000% over the past four months.
In the last 30 days alone, LUNC is up 160.5% and almost 200% in the last 14 days.
For context, Bitcoin has lost over 13% of its value over the last 30 days, while Ethereum has lost roughly 4%, despite the hype surrounding the Merger.
Terra Community Wants to Revive the Ecosystem
The original LUNA token saw its volume reach 7 billion after the collapse of the Terra ecosystem. Token inflation eventually led to its value plummeting from more than $80 to less than a penny.
The developers have since handed over the governance of the blockchain to the community, which is now looking to redeem the cryptocurrency.
Before the new 1.2% burn mechanism, the existing burn rate has already led to the removal of over 3 billion tokens from circulation.
Also, the staking mechanism on Terra has helped the token price rebound. The staking rate was 2.6% of the total supply as of August 27. But now it has reached 7.5%.
LUNC Token Burning Mechanism
The 37% APY staking rewards are the main factor that attracts more stakers. But these high yields bear similarities to the unsustainable yields that caused the original ecosystem to collapse.
However, many are excited about the new burning mechanism, which will go live on September 12. It will apply to on-chain swaps and exchanges like Binance and KuCoin.
Once the burn mechanism is activated, it could result in nearly half of the supply being burned in a few months, depending on trading volume. However, there are many variables that will influence the effectiveness of this mechanism.
By Audy Castaneda
