ZoneBitcoin EditorialIn recent days, there has been an improbable surge in the LUNC token. Remember that LUNC is the new name assigned to the MOON token after it completely collapsed in May 2022. The collapse of Luna was the first big shock (or even the most important) that the cryptocurrency suffered.
At its all-time high, Luna was trading at $120 and during its major fall, it could be sold for a few cents (0,00002000).
At that moment, Luna's investors cried their eyes out and no longer had any hope of revival. However, very quickly, the famous CEO of TerraForm (Do Kwon) decided to create a new blockchain on the ashes of LUNA. Thus, the holders of the late Luna obtained LUNC as compensation in a airdrop terra 2 automatic.
Nothing happened with Monday until the end of August.
Indeed, to the greatest surprise of Luna holders (and therefore of Lunc, following the Luna airdrop), the lunc has gained more than 170% in the space of just one week.
Let's see the origins of this increase first. Next, let's see why we also need to be careful.
Why such a sudden increase in LUNC?
There are two main reasons that can explain the increase in LUNC.
➡️ LUNC staking
A first reason which explains the increase in LUNC can be attributed to the implementation of staking on the Terra Classic blockchain since August 26.
Thus, the new version of the blockchain is perfectly compatible with the Wallet Terra Station that lunatics were accustomed to using.
The largest holders were then able to enjoy very significant staking rewards. There were few validators on the network. This way, people were able to share larger pieces of the pie. The average annual return was around 35%. At the moment, it is more like 14%. It's already huge.
➡️ The 1,2% burn tax on LUNC transactions 🔥
The other element could be explained by the proposal made by Edward Kim (an active member of the Terra community who wants to participate in its rebirth. His proposal (accessible here) consists of implementing an agreed burn of 1,2% on all on-chain transactions.
The proposal was widely debated on the networks, raising the pros and cons of such a proposal...However, this was enough to rekindle investors' flame for LUNC.
Sometimes, it doesn't take much on the networks to generate enthusiasm andsocial engagement.
Token burn: enough to create value?
🔥 The token burn : This is the burning/destroying of tokens. This is a very common mechanism in cryptocurrency issuance structures. 🥵 In fact, it is reproducing (or rather trying) to limit the supply of tokens in order to play on the'Offer and demand (and therefore increase the price).
—> You can read our article to find out why we burn tokenss. You would better understand the underside of this method.
Many crypto projects that you know use the burn mechanism. We can cite Binance BNB (each quarter) or Shiba Inu for example.
Yet, even though in theory it seems to work, it turns out that the market doesn't necessarily take notice. Worse still, sometimes developers burn tokens that weren't even in circulation! However, the narrative is strong enough that novice investors generally appreciate when we talk to them about "burn". They think that the supply will reduce and that "inevitably" the price will increase.
However, for this to work, demand must also follow….In short, understand that it is not as obvious as we would like to believe.
Burning tokens and burning your wings…
For some people, the burning of tokens will only have an ephemeral effect which will spread like wildfire on social networks.
After all, it only takes one well-known influencer to make a video talking about LUNC for an army of other influencers on other networks to promote LUNC…And then euphoria will be in order.
The only problem is that the vast majority of LUNC transactions are done off-chain...What does that mean? Well, the famous 1,2% burn taxes on transactions cannot be done. Indeed, the majority of transactions will take place on exchange platforms... The 3 platforms concerned are Binance, Kucoin and Gate.io.
At the moment, members of the community are asking platforms like Binance or Kucoin to implement the burn tax.
And, the first platform that agreed to do so was the Kucoin platform! The simple announcement caused the $LUNC to increase by more than 40%.
If other exchanges do it, then it could be fire….
But until when?
We must indeed ask ourselves whether this increase can continue in the long term. Is this a real resurrection of the network or simply a periodic pump effect?
Some predict that the LUNC will reach the dollar. This would make market capitalization to billions of dollars….Others are obviously more skeptical.
Let's see this more closely.
Should new investors temper their desire to invest?
So, should you invest in LUNC token?
The first thing to remember is that the crypto market can be irrational. It would be impossible for one person to be sure of the future of LUNC. Indeed, a crypto (even if it's a joke) can increase in value if it has a community that supports it.
This is what makes the crypto world so fuck-up sometimes, it must be said.
So, for Monday, it would not be impossible...Yet, fundamentally, Terra Blockchain lost many of his supporters. For example, on ZoneBitcoin, some of our members no longer want to hear about it… Never again for some. Others are shared.
—> You can read @nesaissa's assessment following the Luna massacre (see " The 5 things I learned about Luna's massacre“)…
Conversely, we know other people who still want to believe in Terra. It's up to you to decide which camp you're in...
The developers themselves are no longer – in the majority – interested in working on a blockchain that has such liabilities. Sometimes we don't get back up from our failures... Sometimes we get back up even stronger...
In short, if you have the soul of a gamer, then be careful anyway. Behind sudden increases, there are often manipulators who know very well what they are doing...
All this can only be a flash in the pan fueled by people who have bags of LUNC that they would love to pass on to you….
Note: No financial advice is given in this or any other article on this blog. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.
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