The founder of the demised blockchain project Terra, Do Kwon, recently shared on Twitter the official wallet address that investors can use to burn their LUNA tokens following repeated requests by a group of the project’s community who believe that this is a better way to restore the token’s value.

However, Kwon warned the community that he does not endorse this idea as he believes that nothing will happen as a result of this action except for investors losing their tokens.

This latest development in Terra’s ongoing drama comes as not everyone within the community appears to agree with Kwon’s proposal to fork the project’s mainnet while creating a new LUNA token and renaming the old one as Luna Classic.

With over 71.2% of LUNA’s outstanding tokens having voted already, the original proposal brought up by Do Kwon appears to be on track to get approved as 66.2% of the votes have favored the fork while “No with veto” votes are standing at 13.4%.

At this point, the only way for the proposal not to get approved would be if a large portion of the remaining voters decides to veto it.

Based on Kwon’s proposal, owners of LUNA Classic will be entitled to receive a portion of the newly minted LUNA tokens depending on when they bought LUNA classic. A total of 25% of the minted tokens will remain in the community pool.

Those who opt to burn their tokens will both lose their Luna Classic forever and will no longer be entitled to receive the newly minted LUNA tokens.

LUNA Surges As Collective Burn Could Lead to Short-Term Gains

Just yesterday, Terra’s native token surged over 50% and trading volumes exceeded the 10-day average by over 2 times as the token’s outstanding supply was reduced as a result of the burn.

Responding to a query concerning the burn address of LUNA, Do Kwon responded to Twitter user @AntoineRoncin: “Why would you do this… Literally burning money”.

The value of LUNA is dropping 10% today and it is currently standing at $0.00018 per coin. Users are favoring the burn as they believe that they will lose very little due to the token’s heavily depressed value compared to the gains they may make as a result of the burn.

A burn would primarily favor those who have bought LUNA at these low levels. For example, if 20% of the token’s outstanding supply is burned, that should make the price rise significantly as the available supply will shrink.

Less Than 1% of LUNA’s Circulating Supply Has Been Burned

luna burn
Luna Burn Address Transactions – Source: Bitquery

According to data from Bitquery, from 16 to 23 May, the burn wallet has received a total of 280.45 million LUNA tokens thus far through a total of 1,710 transactions. According to data from CoinMarketCap, the circulating supply of LUNA currently stands at 6.54 billion tokens meaning that the community has burned around 4.2% of the outstanding supply thus far.

From a practical standpoint, it would make more sense to wait until the fork has passed before burning Luna Classic as that would allow token holders to own a stake in both the old and new Terra blockchains.

Two official proposals have been brought up in Terra’s Research Forum including one that involves the addition of a 3% tax on all transactions made with LUNA while removing the link between the native token and the project’s failed stablecoin UST.

A portion of the proceeds from the transaction tax will be burned while the remaining portion will be stored in the treasury as collateral for UST.

A total of 776,148 votes have been cast already representing less than 1% of the outstanding LUNA supply with 96.2% of the voters saying “Yes”.

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