A few days ago, Terra founder Do Kwon shared on Twitter the address that users can use to burn their LUNA tokens.
Is burning LUNA tokens a good idea?
However, yesterday, in order to avoid misunderstandings, he revealed that he does not think it is a good idea to send tokens to this address to burn them, because it results in nothing but the permanent loss of the tokens sent.
To clarify, as I’ve noted multiple times i dont think sending tokens to this address to burn tokens is a good idea – nothing happens except that you lose your tokens
Want there to be no confusion whatsoever https://t.co/GrzG9cclAr
— Do Kwon 🌕 (@stablekwon) May 23, 2022
Checking the blockchain, it turns out that the address does not have any tokens, despite having received several.
On the contrary, they continue to arrive, as hundreds of incoming transactions are already being counted today alone.
It is worth noting that not only LUNA are being sent, but also UST and other tokens, so in fact their actual circulating supply is decreasing due to tokens being burned in this way.
In some cases, it is even a few thousand, or tens of thousands, of tokens burned in single transactions, although it is worth remembering that there are currently more than 6.5 trillion LUNA tokens, while there are still more than 11 billion UST tokens.
For this reason, as Do Kwon himself points out, it is actually not particularly useful to burn tokens in this way, since it is very unlikely to significantly reduce the circulating supply by burning tokens at this rate.
According to Messari‘s data, the circulating supply of UST started to grow just before mid-November 2021, exceeding 3 billion for the first time, and peaking in early May at almost 19 billion.
The activities recorded so far on the Terra blockchain
From 8 to 14 May 2022, 7.5 billion tokens were burned in less than a week, but since then the pace at which it has been declining has become almost irrelevant.
As for the native cryptocurrency of the Terra ecosystem, namely LUNA, many believe that burning them will somehow help the project recover, but the first to deem their definitive destruction useless is Do Kwon himself.
His idea is to restart the project from scratch with a fork, but many are sceptical about the success of this initiative.
In fact, the idea involves the launch of a new cryptocurrency, and not an attempt to save the existing one. This for all intents and purposes is to be considered dead, so any action involving it could ultimately prove totally useless.
Again according to Messari’s data, LUNA’s circulating supply on 10 May was 0.345 billion tokens, while on 14 May it had skyrocketed above 6.5 trillion. Such a sudden and enormous increase in the circulating supply literally destroyed it, as its value was practically reduced to zero.