LUNA, the native token of the Terra network, gained 10% before the burn.
Terra, one of the leading DeFi protocols, will perform a token burn next week. The incineration will burn 90 million LUNA tokens held in Terra’s community pool. About $4 billion of the network’s native stablecoin, UST, will be minted. Due to the network’s monetary policy, LUNA tokens must be burned to mint UST.
Terraform Labs CEO and co-founder Do Kwon announced that once the proposal is approved, approximately 10% of the total supply will be incinerated. Kwon also stated that the burn should also increase the staking rewards by five times. Staking rewards, which are currently 3.18%, are expected to increase to 15% after burning.
Behind LUNA’s rally lie a few other important developments in addition to the burning news. Earlier in the week, a proposal went into effect allowing IBC transfers on the network. This allows native Terra tokens to be sent to any dApp in the Cosmos ecosystem. Additionally, cross-chain bridge Wormhole also launched support for LUNA and UST on Tuesday, increasing network interoperability by allowing users to transfer assets between Terra, Ethereum, Solana, and Binance Smart Chain.
On the other hand, TVL on the network also hit a new high with $10.22 billion. This figure makes Terra the fourth largest network in terms of TVL, after Ethereum, Binance Smart Chain, and Solana.
The network’s native token, LUNA, has traded close to its ATH, gaining close to 10% as the close approaches. As of broadcast time, LUNA has experienced some decline due to the market drop and is trading at $ 43.