What is LUNC? Luna, the sister token of the so-called stable coin, which collapsed in early May 2022, is making a comeback. Because its co-founder Do Kwon and Terra community are implementing Kwon's Terra ecosystem restoration plan. The plan includes creating a hard fork in the Terra chain and dividing it into two different chains. The original version is now called Terra Classic, the token is renamed Luna Classic (LUNC), the new version is called Terra 2.0, and the token is called Luna (LUNA). What does Luna Classic mean? What's the difference with Luna?

1、 What is Terra Luna Classic (LUNC)?

Luna Classic (LUNC) is the original coin of the old chain, which has been renamed Terra Classic. It will be launched on May 28, 2022 after the creation of the Genesis Block on the new chain after the bifurcation.

LUNC was originally called LUNA, which retains all the attributes of the original Terra Luna coin and continues to serve as the stability mechanism of TerraUSD (UST), the Terra Classic stable coin. As of September 2022, the circulation supply of LUNC is close to $7 trillion, and its market value is slightly less than $2 billion. The price of Luna Classic token will be about US $0.0003 on September 27, 2022.

After the governance proposal was passed in late September, a large-scale LUNC combustion is in progress, with a 1.2% tax levied on each transaction. The goal is to reduce circular supply and increase its demand.

In the months after the name change, the price of Terra Luna Classic hovered at a low of US $0.0001, which is not surprising because the token and cryptocurrency markets are bearish. However, LUNC rebounded after its tax reduction proposal was approved and launched on September 21, 2022. The tax will consume 1.2% of each transaction on the blockchain, which will reduce the supply of LUNC and increase its demand.

On September 26, 2022, Yuanan announced the destruction of all transaction costs of LUNC spot and margin trading pairs, and Luna Classic rose further. LUNC prices soared from $0.00018 to $0.0003 in just a few hours, an increase of more than 60%.

2、 Why are there two versions of LUNA and LUNC?

The original Terra blockchain was launched by Do Kwon and Daniel Shin in January 2018, and the ICO was held for LUNA in early 2019. It performed well in a few years, then became one of the top 10 cryptocurrencies (by market value). However, in the first ten days of May 2022, the TerraUSD (UST) stable currency lost its link with the US dollar and collapsed together with its sister token Luna. It also dragged down the whole cryptocurrency market, leading to the beginning of the long cryptocurrency winter.

To revitalize the blockchain, Do Kwon has designed a recovery plan, which shows that the Terra chain will experience a hard fork and be divided into two chains. The new chain will not have any stable currency. Terra Verifier approved the plan on May 25, 2022, and launched Terra 2.0 on May 28. Terra 2.0's native token is called LUNA. At the same time, the original Terra blockchain was renamed Terra Classic, and its native token was renamed Luna Classic (LUNC).

LUNC and LUNA are pledge tokens used by their respective chains for governance. However, LUNC has the additional function of helping to maintain the price of its algorithm stable currency Terra (UST) through the algorithm market module of the protocol. When the price of UST rises too high or falls too low, the module will encourage the destruction of UST to cast LUNC, and vice versa. This in turn helps to stabilize price volatility.

Therefore, the main difference between the two tokens is that LUNC is an arbitrage mechanism for Terra algorithm to stabilize coins, while LUNA is not because there is no algorithm to stabilize coins.

summary

The above is the explanation of the meaning of Luna Classic and its relationship with LUNA. When the original Terra blockchain collapsed in May, the confidence of many investors and cryptocurrency enthusiasts was shaken. People quickly called Do Kwon a fraudster and doubted whether Terra would make a comeback. Since the bifurcation, Terra Classic blockchain has shown hope. The trend of the token is particularly obvious after the Coin Security announced that it would levy LUNC tax on its transactions. This indicates that Luna Classic is likely to appreciate in the next few years.