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The tremendous volatility of the cryptocurrency market is no new news to cryptocurrency investors. This volatility is also evident in the collapse of the Terra blockchain native token luna, which later gave rise to the native pre-existing token lunc. The collapse started when UST, which is an algorithmic stablecoin on the Terra Network, which is an open-source blockchain system for it, was depegged from its $1 peg. 

The Terra blockchain network, however, still hosts the LUNC coin, and users have access to the terra blockchain through which they can spend, store and trade, or exchange terra stable currencies. Although, the LUNA crash birthed two cryptocurrency tokens on the Terra blockchain: Terra Classic (LUNC) and Luna.

What is Terra Luna Classic?

LUNC was the first token ever created on the Terra blockchain and also serves as the Terra blockchain’s native token. Following the demise of the LUNA coin, Do Kwon, the creator of the Terra blockchain, proposed a new strategy to bring the project back to life in May 2022. 

The proposal was passed on to the Terra community for voting and approval, suggesting that the Terra blockchain’s initial or pre-existing token be renamed Luna Classic LUNC. This proposal was approved by the community, and the new coin, known as LUNA or LUNA 2.0, was introduced on the Terra blockchain network on May 28th, 2022. 

Although even with the introduction of the new coin, the lunc coin is still present on the Terra network, trade activity has decreased. 

The algorithmic stablecoin UST, which was considered the lone cause of the Luna collapse, was rebranded as USTC, enabling a new blockchain without the problems of the initial algorithm in May 2022.

The Reason Behind the Luna Token Crash

It is reported that the following spike in FUD on the luna coin was due to the quantity of Terra stablecoin UST that was withdrawn from the Anchor protocol by Terra network investors as a result of the collapse. This swift move was brought on by the rumor that Terra Network was changing the fixed interest rate of 20% into a variable rate. 

The news created a lot of panics, which also fueled investors to FUD and start selling and exchanging their LUNA tokens in their wallets for other stablecoins. Since the UST stablecoin works on an algorithm that depends on the Terra Native token Luna to maintain its stability. 

The sudden rush of amounts of UST swapped for Luna tokens created more supply of LUNA tokens in circulation and less demand for UST stablecoins, which resulted in the price of UST plummeting sharply below the fixed $1. The UST stablecoin algorithm was designed to maintain a stable price with the luna native token. This balancing mechanism, however, broke down during the rush, causing both the UST and the LUNA to collapse.

Network administrators, who are also called validators, are responsible for approving transactions on the Terra network, and because these validators can exercise governance rights, they voted in favor of the proposal to launch Luna 2.0. 

In an attempt to compensate old Terra network users who had been impacted by the collapse, they were given the new LUNA token through an airdrop. This distribution was made based on the amount of UST and LUNA tokens each network user possessed. 

The LUNC token operates on the Ethereum blockchain and can be traded on Binance, KuCoin, Gate.io, BitGlobal, Huobi Global, Coinbase, and Crypto.com.

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LUNC Use Cases

Balancing Price Volatility

The Luna Classic token, LUNC, is designed to counteract the unstable value of the Terra stablecoin, Terra USD (UST). To keep the LUNC token stable, it is exchanged for a certain number of stablecoins. This helps burn off the LUNC tokens, which increases the token’s value.

Following this procedure, the remaining LUNC tokens are reinvested for further network expansion. This crucial procedure is also termed “seignorage.” Following this seignorage procedure, the LUNC token’s value rises, but the price of the USTC stablecoin remains the same.

Mining and Governance

LUNC is used for mining and governance on the Terra network. Because Terra is a community-governed protocol, LUNC token holders can participate in treasury governance, and LUNC token holders can vote and make suggestions.

By submitting proposals, token holders are permitted to vote on software updates, fee structure changes, technical changes, and monetary policies.

Also, blockchain miners on the Terra network, who are in charge of logging and verifying transactions on the blockchain, can stake the Luna token.

The proof-of-stake consensus algorithm used by the Terra blockchain enables miners to stake LUNA tokens to validate transactions. Users’ transaction fees also go toward paying the miners in the Terra blockchain network.

Data Storage 

To conduct network transactions and save data, the LUNC token is used. Data is kept on the blockchain network once transactions have been verified by network miners.

Terra Classic LUNC Review

Due to the consistency of its volume, the LUNC token supply increased from April 2021 to April 2022. The annual returns on Terra UST deposits, which were up to 20%, contributed to this demand. 

In April 2022, the circulating supply of LUNC dipped below 400 billion due to a sharp decline in deposits on Anchor of over $14 billion in UST. Investors began leaving Anchor, the yield-generating forum on the Terra blockchain, because the price of Terra’s stablecoin UST diverged from the $1 peg. This was initially the only justification for purchasing UST and LUNA.

The purpose of the UST was to generate (mint) and burn (destroy) UST tokens to balance supply and demand for the stablecoin at a $1 price peg and maintain a one-to-one exchange rate with the US dollar.

However, even with the recent crash of the Luna token, there has been an increase in the number of Google users searching for the keyword “terra Luna classic,” and this is also the general trend in the industry (uptrend). 

There are not many bullish trends for the LUNC cryptocurrency. However, the network users burned 10,000,000 LUNC coins intending to revive the LUNC token.

Terra Luna Classic, LUNC Price Prediction

A bullish run is anticipated for Terra Classic LUNC. LUNC is expected to reach a price of $0.00006 soon. Predictions place the LUNC price at $0.00028. 

LUNC is now ranked 216 in terms of market capitalization. The highest anticipated cryptocurrency price for LUNC is $0.000471. However, technicians predict that the bullish trend seen in 2021 will start up again. This prediction is supported by general knowledge of the cryptocurrency market’s high volatility.

The LUNC coin project is facing increasing social media criticism regularly. Do Kwon, the founder of Terra Blockchain, who was previously accused of purposely programming the demise of the LUNC token to profit by $2.7 B, spoke of the enormous losses he suffered due to the crash of the UST stable currency.

LUNC Crypto: Is LUNC a Good Investment?

Trading LUNC is not recommended by technical analysts as trading the LUNC token is considered high risk at this time. Due to the strong social media sentiment surrounding the initiative, it is believed that Terra Blockchain will resist any development on the LUNC project. 

Investors are advised to restrain emotions to avoid making risky decisions and consider proper risk management when deciding whether or not to trade the Terra Luna Classic (LUNC). 

Although not immediately, it is believed that the LUNC token will have a bullish market trend.

One of the largest blockchains in terms of income collection is the Terra Network, and this is expected to continue in the years to come. 

Although the community members supported the launch of the new token, the Terra Blockchain team has not created a roadmap for the LUNC chain, and this is important to keep in mind when choosing an investment because the roadmap helps persuade investors and also states the project’s goals and capabilities.

Because major crypto exchanges delisted the LUNA token as a result of the crash, users are more susceptible to cybercrime, as unregulated and fraudulent exchanges may still list the LUNA coin in a bid to rip off unsuspecting investors. 

Staking of the LUNC token is still possible on the Terra network because the project uses a proof of stake consensus method. However, it’s crucial to note that the staking validators have been inactive since the LUNA token’s demise, which might be a sign that the network’s users have little faith in the project.

LUNC Price Prediction Q3

If the altcoin seeks support from volumes, it may climb to greater heights. if the digital asset is successful in establishing a presence in the market. LUNC’s price may surge to its recent high of $0.000713.

On the other hand, if pump and dump schemes continue to target it, the price may decrease to $0.0000573. The average price could nevertheless end up at $0.0000644 due to the linear price projection’s restrictions.

LUNC Price Prediction Q4

The fourth and final quarter of 2022 could benefit from the LUNC price’s optimism. The price of the digital asset may soar to its maximum target of $0.0000901 with an increasing number of buy orders.

In contrast, if the larger market is taken over by bears, the price may drop to $0.000076. However, if buying and selling pressures are balanced, the price may end up at $0.0000814.

LUNC Price Prediction 2023

If whales or large investors make a significant push for Terra Classic, LUNC may remove zero from the price. By the end of 2023, the digital token may have reached its potential high of $0.000132. On the other hand, if the project is devoured by bears, the price of LUNC could drop to as low as $0.0000825.

LUNC Price Prediction 2024

Terra Classic’s LUNC could reach a high of $0.000208. If it manages to maintain its prominence over Terra (LUNA). However, if the crypto industry undergoes significant reforms, including regulatory crackdowns by governments around the world. The price of LUNC could fall as low as $0.0001226.

Conclusion

The LUNC token is the first token on the Terra blockchain. Its collapse in May 2022 upset investors and caused sizable losses in the cryptocurrency market. Terra Luna Classic LUNC and LUNA 2.0 are currently regarded as risky to trade, even though Do Kwon, the founder of the Terra Blockchain foundation, proposed launching the new LUNA token as a measure to aid in loss discovery after considering the impact of the market volatility on the LUNA project.

The demise of the LUNA token had several negative consequences, which also affected the entire cryptocurrency market. The fall of the LUNA project, which increased governmental and public opposition to cryptocurrencies, partially undermined the goal of the cryptocurrency industry, which is to persuade people and governments to accept cryptocurrencies. While more technical and fundamental research is being done, investors are urged to evaluate the token carefully. 

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CryptoWhat
CryptoWhat was created in 2015 and has become one of the most trusted and well-respected sources of information on all things crypto. The blog's authors are dedicated to providing clear, concise, and jargon-free explanations of this complex technology, so that everyone can understand it.