In another attempt to support the revival of Terra (LUNA), the community voted to burn a large amount of UST from their community reserve.
In early May, andTerra’s founder, Do Kwon, explained that a possible solution to the Terra debacle is to absorb the supply of stablecoins. In response to this, users proposed burning the 1 billion TerraUSD (UST) that was stored in the Terra community pool and the remaining cross-chain UST that are deployed on the Ethereum blockchain as incentives.
According to the proposal, the burning will help “reduce the outstanding debt of Terra’s economy.” Aside from this, it is also expected to play a major role in restoring UST dollar parity by removing a large part of the excess supply.
The proposal was presented on May 12 and was expected to materialize after seven days. However, it was not executed due to a mismatch in the amount of UST in the community pool and the proposal. This is because another proposal was executed, which involved the withdrawal of some funds from the common fund.
Nonetheless, the community created another proposal on May 20, to proceed with the burning. After seven days, the proposal has finally been approved with 153,644,852 votes in favor from burning the UST supply.
Aside from community burning efforts to support the project, crypto exchange MEXC Global also committed to a month-long buyback and burn for LUNA. The exchange promised to use the trading fees earned by the new LUNA/USDT spot trading pair to buy LUNA and send it to the burn wallet address.
Despite sharing a burning address with the Terra community, Kwon is not in favor of burning. The infamous founder of Terra warned the “LUNAtics” about sending LUNA to the burning address. According to Kwon, burning will do nothing. He told users that “nothing happens except you lose your tokens.”
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