Terra Classic (LUNC) is the native cryptocurrency of the original Terra blockchain, now called Terra Classic.
This decentralized open-source blockchain platform was designed to facilitate global payments using algorithmic stablecoins linked to various fiat currencies.
Main features:
Algorithmic stablecoins: Terra Classic uses a system of stablecoins whose value is maintained stable through algorithms and the use of LUNC as a backing token.
Burn and mint mechanism: To maintain the stability of its stablecoins, the protocol adjusts the supply of LUNC, burning or minting tokens according to market demand.
Community governance: LUNC holders can participate in key decisions about the development and updates of the network through a decentralized governance system.
Utilities:
Payment of fees: LUNC is used to pay transaction fees within the Terra Classic network.
Staking: Users can delegate their LUNC to validators to secure the network and, in return, receive rewards.
Participation in governance: LUNC holders have the right to vote on proposals that affect the future of the Terra Classic blockchain.
Technical Document:
Terra Classic has a whitepaper located on its official website
Annual price evolution of Terra Classic (LUNC):
This is a list with the approximate price of LUNC at the end of each year since its launch:
2019: $0.20
2020: $0.65
2021: $90.00
2022: $0.00015
2023: $0.00013
2024: $0.00013 (as of December 15)
The Luna and UST incident:
In May 2022, the Terra ecosystem suffered a catastrophic collapse known as the 'Luna incident.' This event was caused by the decoupling of its algorithmic stablecoin UST from the US dollar.
UST relied on a mechanism in which its value was kept stable through its relationship with LUNA (now LUNC). This system allowed for the burning or minting of tokens to balance the supply and demand of UST.
Cause of the collapse:
A large withdrawal of UST from liquidity markets led to the loss of its parity with the dollar (depeg).
Attempts by the algorithm to mint large amounts of LUNA (now LUNC) to restore stability resulted in massive inflation, causing the value of LUNA to collapse rapidly.
Impact:
In a matter of days, LUNA lost almost 100% of its value, and UST fell well below its 1:1 parity with the dollar.
Billions of dollars in market value evaporated, affecting investors, projects, and global users.
Renaming:
The original blockchain was renamed Terra Classic, and its token LUNA was renamed as LUNC.
A new blockchain called Terra 2.0 was launched, with a new token LUNA to try to rebuild trust in the ecosystem.
* Terra Classic and its token LUNC represent a significant part of cryptocurrency history, especially in the realm of algorithmic stablecoins *
