The Terra community approved a proposal to burn about 88,7 million Terra tokens (LUNA) worth about $4,5 billion and release 4-5 million UST stablecoins. How is it considered, such a step will help the development of the Terra project
Burning will take place over the next two weeks, and the first stage has already been completed — was burned 520 000 LUNA.
Terra co-founder Do Kwon noted, that this measure is aimed at financing new services in the Terra ecosystem. In particular, Ozone insurance protocol will be supported, which facilitates covering the risks of technical disruptions in any Terra-based DeFi protocol.
According to DeFi Llama, Terra blockchain ranks 4th among smart contract platforms in terms of blocked assets with an indicator $11,36 billion.
Remarkably, that some members of the community had doubts about the proposal to burn and felt, that almost 89 million LUNA — it's too much. But Kwon explained, that, in part, burning will reduce the supply in the Terra community pool:
“With a fully diluted network market capitalization of almost $40 billions having too large a community pool is a systemic risk. I think, that community funds should be large enough to pay for public services. But the DAO doesn't need billions of dollars to work. "
At the end of September, Terra was updated under the name Columbus-5, thanks to which every time, when the UST stablecoin is released, burned LUNA for the same amount (rather than going to the community pool).
Jeremy Ong, VP of Business Operations at Delphi Digital, believes, that the burning will ultimately benefit the LUNA stakers:
“LUNA stakers will have less competition, since they won't have to compete with the community pool "