Luna Classic (LUNC): An Overview of the Terra Classic Blockchain's Native Asset

Luna Classic, commonly known as LUNC (LUNC/USDT), serves as the native asset of the Terra Classic blockchain. Originally named LUNA, this token underwent a significant transformation following the May 2022 collapse of LUNA and UST. This event triggered a hard fork, resulting in the creation of Terra and the subsequent renaming of the original token from LUNA to Luna Classic (LUNC). It's worth noting that the "LUNA" moniker now refers to LUNA 2.0, the native asset of the new Terra Luna blockchain, which was established as a recovery measure post-collapse.

The hard fork led to the emergence of two parallel blockchains within the Terra ecosystem:

The original Terra blockchain, now referred to as the Terra Classic blockchain, features Luna Classic (LUNC) as its native asset and TerraClassicUSD (USTC) as its twin coin.

The newly created Terra blockchain, with Luna 2.0 (LUNA) as its native asset.

This article primarily focuses on LUNC and its role within the Terra Classic ecosystem.

Core Features of LUNC

The Terra Classic network, previously known simply as the Terra Blockchain, underwent rebranding by co-founder Do Kwon as part of his revitalization strategy. This initiative also saw the birth of the new Terra 2.0 network.

LUNA 2.0, the native token of the new Terra chain, emerged from the ashes of the old Terra chain's collapse. The attack on the original Terra chain led to the decoupling of the UST stablecoin and the dramatic fall in the price of the LUNA (now LUNC) token. This catastrophic event rippled through the global crypto market, resulting in losses exceeding $40 billion. In response to this crisis, Do Kwon and Terraform Labs engineered a separate Terra blockchain, giving rise to the new Terra protocol and LUNA.

LUNC works in tandem with USTC, an algorithmic stablecoin designed to maintain price stability. USTC aims to maintain a 1:1 peg with the US dollar, meaning that ideally, 1 USTC should equal $1.

Terra Classic employs a "mint and burn" mechanism to achieve price stability:

When USTC's price falls below $1, users and arbitrageurs can send (burn) 1 USTC to the system and receive (mint) $1 worth of LUNC in return.

Conversely, when USTC's price exceeds $1, users and arbitrageurs can send (burn) $1 worth of LUNC to the system and receive (mint) 1 USTC.

LUNC Use Cases

As the native token of the Terra Classic blockchain, LUNC offers several utilities to its users:

Users can stake LUNC to earn rewards generated from transaction fees.

LUNC holders can participate in treasury governance, including proposing and voting on various initiatives.

The token serves as a means to pay fees for transactions and data storage within the network.

LUNC Mechanism and Burn Process

Terra Classic users have the option to stake their LUNA Classic (LUNC) tokens with validators. These validators play a crucial role in the network by validating all transactions and recording them in blocks. As compensation for their work, validators receive a percentage of LUNC tokens as rewards.

The LUNC burning mechanism comes into play when demand for the Terra Classic stablecoin rises. If the stablecoin's value threatens to exceed its fiat currency peg, the ecosystem responds by burning more LUNC tokens from the total supply. This process allows for the minting of additional stablecoins to meet demand and bring the price back within the fiat-pegged range.

As the token burn rate increases, the circulating supply of LUNC decreases, potentially driving up its price. Increased demand for the Terra Classic stablecoin can further enhance LUNC's investment value. However, if demand for USTC stablecoins declines, their price may fall below the pegged fiat currency value. In such cases, the Terra Classic ecosystem burns a certain amount of stablecoins and mints more LUNC tokens, leading to an increase in LUNC circulation supply and potentially causing LUNC prices to decrease.

Acquiring LUNC

For those interested in purchasing LUNC, Gate offers a straightforward process:

1. Log into your Gate account and navigate to the trading section.

2. Use the search function to find "LUNC" and view the available trading pairs, such as LUNC/USDT.

3. In the trading interface, enter the amount of LUNC you wish to purchase. You can choose between various order types, including Limit, Market, or Stop-limit orders. After selecting your preferred order type and confirming the details, execute your purchase. The acquired LUNC will then be reflected in your Spot Wallet.

Remember to conduct thorough research and consider the potential risks before engaging in any cryptocurrency transactions.