Terra Classic (LUNC) has announced the v1.0.5 upgrade that will restart token burning processes. The proposal for the upgrade to v1.0.5 from v1.0.4 was accepted on January 25, 2023. The Terra Classic v1.0.5 upgrade is estimated to take place on February 14 at block height of 11.541.520.
Although Terra currently runs on the new network, Terra Classic is managed by the community. With the v1.0.5 upgrade, the Terra Classic team aims to prevent burned LUNCs from being regenerated. In December 2022, a cryptocurrency platform stopped its burning processes until next March, so the Terra Classic community focused on a plan in which they will play a role in burning LUNCs. Due to the decrease in the amount of burnings, the community focused on burning more LUNCs to compensate. The new upgrade, which is estimated to take three hours to complete, also aims to solve LCD computing problems in the blockchain network.
Cryptocurrency burning is an essential part of the cryptocurrency industry. This process removes cryptocurrencies from circulation.
For more information, you can read “What Is Token Burning?”
What Has Happened in the Terra Ecosystem?
LUNC is the native token of the Terra Ecosystem that is used for transactions on the network. Terra Classic, a blockchain protocol that allows users to generate stablecoins, was released by Daniel Shin and Do Kwon in 2018 and became operational in April 2019. In the ecosystem, there is a stablecoin, UST, indexed to 1 USD, as well as its native token LUNC. (UST is an algorithmic stablecoin.) The value of UST was tied to the LUNA ecosystem, and each UST was equal to the US dollar worth of LUNA. However, there were negative developments in the ecosystem, and the crisis began when UST lost its Peg. The supply of LUNA was increased to maintain value, and as the supply in circulation increased, serious selling pressure occurred. The pressure increased the impact of the crisis, and Terra stopped and restarted block production processes several times. Moreover, LUNA and UST transactions have been suspended on many trading platforms.
Project developer and manager Terraform Labs has come up with several plans to bring the crisis under control. The firm's CEO, Do Kwon, has launched a Fork plan on the Terra blockchain to create a new blockchain. As a result, the native token of the new Terra blockchain was called LUNA, while Terra Classic's native token remained LUNC.