Terra begins the work of saving UST by burning 1.4 billion tokens

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2022-05-28 21:35:40

After a governance vote in the middle of last week, the amount of UST approved for the burn-coin process will amount to 1.4 billion tokens.

The collapse event of the Terra . ecosystem are making positive progress after stormy days. Previously, the proposal from CEO Do Kwon to “sacrifice LUNA to save UST” completely failed and contributed to pushing these 2 tokens and investors to the door of death.

Until now, with the launch of Terra V2.0, the Terraform Labs development team continues to propose several new directions to reduce the outstanding supply of UST and attempt to restore the exchange rate of this token. by burning a portion of the UST remaining in the project’s community pool.

Burn-coin event announcement tweet from Terraform Labs

According to Terra, eliminating a significant portion of the excess supply of UST immediately alleviates much of the peg-skewing pressure on the UST. Additionally, the team proposes to burn the remainder of the UST that exists on Ethereum cross-chains implemented as a liquidity incentive from the community pool.

Thus, the total amount of UST that Terra will burn is nearly 1.4 billion UST, equivalent to 11% of the total 11.2 billion UST supply in circulation currently. At the time of writing, the proposal received 99.3% of the total votes in favor. This means that Terraform Labs, Terra’s development company, will almost certainly proceed to burn UST in the near future.

Event voting is almost complete

This process will take place in two phases. First, Terra will send approximately 1 billion UST from the project’s community pool to a dedicated wallet address to permanently remove this UST. After that, the 370 million USTs that exist on the Ethereum cross-chains will be returned to Terra and Terraform Labs will handle the rest.

The approval to burn UST comes just a day after Terra approved a plan to revive the platform by creating the new Terra 2.0 blockchain.

Blockchain Terra 2.0 will be launching soon this weekend and conducting an airdrop of new LUNA tokens to old LUNA and UST holders who suffered losses due to the recent crash. The two old tokens have also been renamed LUNAC and USTC. However, the new Terra blockchain will exist without the UST. This also means that the utility used for UST seems to become zero when most developers have agreed to move to the new chain.

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