What is Terra Classic (LUNC)?

Deep Dive

1. Algorithmic Stability & Collapse

Terra Classic began in 2018 as a blockchain protocol using its native token, LUNA (now LUNC), to stabilize algorithmic stablecoins like TerraClassicUSD (USTC). The system minted or burned LUNA to balance USTC’s supply and demand, aiming for a $1 peg. However, in May 2022, USTC lost its peg, triggering hyperinflation of LUNC’s supply and a 99% price crash (CoinMarketCap).

2. Community-Led Revival

After the collapse, the chain split via the Terra Ecosystem Revival Plan. The original chain rebranded to Terra Classic (LUNC), while a new chain, Terra 2.0 (LUNA), launched. LUNC now operates independently, managed by validators and stakers who vote on upgrades like the August 2025 v3.5.0 network update to reactivate core modules (CoinMarketCap).

3. Tokenomics & Governance

• Burns: A 0.5% tax on transactions reduces LUNC’s 6.5 trillion supply – over 100 billion burned since 2022.
• Staking: Users delegate LUNC to validators for ~5-14% APR, securing the network and voting on proposals.
• USTC: Now a freely traded asset (no peg), used in DeFi and governance alongside LUNC (Terra Classic Portal).

Conclusion

Terra Classic is a cautionary tale turned community experiment, maintaining a functional blockchain with deflationary tokenomics and decentralized governance. While its stablecoin ambitions failed, LUNC’s persistence raises questions: Can a community-driven chain thrive without its original use case? Explore its evolving ecosystem to find out.