Terraform Labs (TFL) successfully executed a significant token burn today, removing 251 billion LUNC and 264 million USTC from circulation. However, the market reaction to this event has been muted, with both tokens experiencing minimal price fluctuations.
The Burn and the Shuttle Bridge Shutdown
As part of its settlement with the U.S. Securities and Exchange Commission (SEC), TFL committed to burning specific assets held in its Shuttle Bridge wallets. This cross-chain bridge was permanently shut down on October 31, 2024, and the tokens within it were subsequently burned.
While this burn represents a substantial reduction in absolute terms, it has not significantly impacted the token prices. LUNC and USTC have seen only marginal gains of 0.41% and 0.02%, respectively.
Why the Limited Market Impact?
Despite the large number of tokens burned, the overall circulating supply remains vast. LUNC, for instance, still has a circulating supply of 5.45 trillion tokens. The recent burn accounts for only about 4% of this supply, insufficient to create a significant scarcity effect.
BREAKING!
— Lunc Scan (@LuncScan) November 4, 2024
251 Billion $LUNC
264 Million $USTC
Have just burned in the last hour!#LUNC #USTC #LuncCommunity #TerraClassic #LunaClassic #LuncBurn #UstcBurn pic.twitter.com/9UjrkSmOWK
Market sentiment also plays a crucial role. Investors may be hesitant to invest in these tokens without further evidence of sustainable growth and utility. While the burn is a positive step, it may not be enough to catalyze a significant price surge.
Also Read: LUNC and USTC Removed from LFG Wallet- Is the Burn Still Happening? A Closer Look
The Road Ahead for Terra Classic
The Terra Classic community is actively working to restore value to these tokens. Future initiatives, such as additional burns or the development of new use cases, could potentially stimulate greater interest and price appreciation.
For now, the market remains cautious, and it is uncertain whether today’s burn will be a catalyst for long-term price recovery.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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