After a governance vote, Terra’s core developers were approved to burn 1.3 million UST from its community-pool pool. This is approximately 11% of the 11.2 billion UST supply.
Terra governance has approved a proposal for the burning of all TerraUSD tokens (UST) held in the community pool. UST can also be used to provide liquidity incentives for Ethereum.
This is more than 1.3bn UST or 11% of the 11.2bn UST supply according to CoinGecko. 99.3% of all votes cast were in favor of the proposal. After the vote, Terraform Labs (Terra’s core development company) will execute the burn.
The process will be carried out in two phases. It will first send 1 billion UST from Terra’s communitypool to a burned module, where it will permanently remove from the supply. The team will then manually transfer 370 million UST from Terra to the Ethereum blockchain. They will also destroy them, as explained in an explanation post on Terra governance forum.
The dollar-pegged algorithmic stablecoin, UST, plummeted from $1.04 to $0.04 cents earlier this month before recovering slightly to $0.07 where it trades today. This is a 93% decrease in its value from before the dollar parity fall.
The Terra governance system approved the UST fire just days after Terra also Terraform’s revival plans to relaunch Terra’s blockchain and create LUNA2.0 tokens.
Friday will see the relaunched chain go live and then airdrop the new LUNA2.0 tokens to Terra-based asset holders. The Terra blockchain will not be able to use the UST tokens.
