The Terra Luna Classic Community Faces a Critical Decision: A Burning Proposal on the Horizon

VegasMorph, a prominent validator in the Terra Luna Classic community, made a bold proposal that sparked heated debate. The proposal involves burning a significant amount of TerraClassicUSD (USTC) currently held in community pools. This move is seen as a strategic effort to induce deflation within the Terra Luna Classic ecosystem, following VegasMorph’s previous proposal to burn a whopping 800 million USTC from the Risk Harbor Multisig Wallet.

VegasMorph’s new proposal focuses on burning approximately 8 million USTC, a significant portion of the 7.95 million USTC currently in the community pool. This recommendation to utilize spend requests for burn addresses has been shared on various platforms. StakeBin data confirms the current holdings of the pool.

Given the community pool’s significant reserve of 3.3 billion LUNC, sufficient to fund on-chain activities and other costs, the rationale for this proposal is to utilize funds deemed surplus for community needs.

VegasMorph emphasized the importance of this action, saying, “By starting this USTC burn, we not only meet our deflation goals, but also demonstrate our commitment to self-reliance and wise management of community assets.”

Origin of the proposal: Seeking legal safeguards

This proposal comes amid another controversial proposal to burn 800 million USTC. After an initial proposal (number 11913) to update the Terrad client for this purpose was rejected, a new approach currently undergoing governance voting seeks a legally safe method of burning.

Terra Luna Classic validator Lunanauts raised concerns about the legal implications of the initial proposal, prompting it to explore alternative strategies. The latest proposal (number 11927) proposes to burn the remaining 800 million USTC in the Risk Harbor multi-signature wallet using smart contracts.

This measure became essential after Risk Harbor lost the wallet’s keys and decided to blacklist it. To execute this burn, the core developer must write a contract to transfer all holdings to the burn address via a single MsgSend. This contract is then moved through governance to that code ID, eliminating the need for validators to install the code, reducing potential legal issues.

In the initial voting phase, the proposal received an overwhelming 96% support, with only a few opposing or abstaining. Voting is scheduled to end on December 27th, but major validators have not yet voted.

Market Impact: Price movements during decisions

As the Terra Luna Classic community deliberated these important decisions, the market reacted. The price of LUNC was trading at $0.000155, down 3% over the past day. At the same time, the USTC price fell to $0.0334, down 6% from the previous day and 15% from last week. Despite these fluctuations, trading volume surged 141% in the last 24 hours. This reflects the community’s active participation in these proposals and the wider Terra Luna Classic ecosystem.