Will Luna Recover or Will LUNC Go Up?

Article Coverage: Luna Classic Performance, Latest Luna Classic Trading Sentiment, Factors that Could Help LUNC Recover, LUNC Ecosystem.

Luna-Classic Price Performance So Far

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Last 7 Days	-1.2%
Last 1 Month	-2.6%
Last 12 Months	-55.7%
Quality Of Investment	Poor

• Dec 17th: +7%
• Jan 8th: +3%
• Feb 5th: -3%
• April 8th: -63%

Will Luna Classic Recover? Background

After the Terra crash in May 2022, the Terra Foundation launched a new version of Luna called Luna 2.0 $LUNA. The older crypto is now called Luna Classic $LUNC. While it was expected that investors would back the new Terra Luna, the reverse happened. Luna Classic is now 2.5x larger in Market Cap than Luna 2.0. The question is, is this Terra Luna recovery sustainable and real? Read on.

Why did Luna Crash?

• The Terra UST was an algorithmic Stablecoin backed by Terra Luna Token
• $2B worth of UST was unstacked from Anchor and sold in the market. This led to a de-pegging of UST from the dollar
• As a consequence, many consumers began to convert their UST (worth less than a dollar) with a dollar worth of Luna
• This led to billions of dollars worth of Luna being mined.
• The cycle of further UST Selling continued leading to the mining of billions of Luna which in turn crashed the price of Luna as well.

Factors That Could Drive LUNC Recovery

The potential recovery of Luna Classic relies on the unwavering dedication of its community, which remains actively engaged despite challenges. This steadfast support is a crucial cornerstone for the coin’s revival.

Beyond community backing, Luna Classic’s future is intertwined with the pace of protocol development and technological advancements in the Terra ecosystem. The team is actively addressing challenges to ensure the coin’s long-term viability.

In addition to community support and protocol development, efforts are directed at enhancing the burn mechanism to reduce Luna Classic’s circulating supply—a vital factor for its recovery. Success hinges on the burn program, sustained community backing, and ongoing progress in technology and protocol development.

Will Luna Recover?

The Luna Classic community has been quite active in trying to revive LUNC after its major crash. Here’s a more detailed look at their key initiatives:

1. Reducing Supply Through Burning:

• Transaction Tax Burns: A core proposal involves implementing a tax on LUNC transactions. This tax would be collected and then burned, permanently removing those tokens from circulation. This reduces overall supply, potentially increasing the value of remaining tokens due to scarcity.
• Validator Commission Burns: Some validators, like ClassyCrypto, have pledged to burn their entire commission earned from staking LUNC. This reduces the number of tokens in circulation and showcases commitment from the validator community.
• On-chain Burning Mechanisms: Developers are exploring ways to integrate LUNC burning directly into the Terra Classic blockchain protocol. This could involve burning tokens based on specific actions or events within the ecosystem.

2. Rebuilding Utility and Demand:

• Project Development Incentives: The community is actively seeking to attract developers to build projects on the Terra Classic blockchain. This could involve grants, hackathons, or technical support. Increased project activity creates more use cases for LUNC, potentially driving demand.
• Community-driven Use Cases: Community members are exploring ways to directly utilize LUNC for payments or services. This could involve creating decentralized marketplaces or adopting LUNC as a currency within specific communities.

3. Fostering Transparency and Trust:

• Regular Updates and Communication: The community prioritizes keeping LUNC holders informed about recovery plans and progress. This includes regular updates on community forums, social media channels, and developer blogs.
• Open Collaboration and Governance: The Luna Classic community strives for an open and inclusive approach. They encourage participation in discussions and decision-making processes related to the future of LUNC.

All measures were focussed on two main themes- Burn a significant proportion of tokens and two, enable the technology to encourage Dapps to launch their services on Terra Classic which in turn drives demands for Luna Classic Tokens.

Challenges and Considerations:

Burning vs. Trading Activity: Critics argue that burning tokens might reduce trading volume, hindering recovery. A healthy balance needs to be found between reducing supply and maintaining active trading.

Community Building and Market Sentiment: The effectiveness of community efforts can be subjective. While a strong community fosters trust and collaboration, broader market sentiment towards LUNC also plays a significant role in recovery.

Luna Classic’s Price recovery will depend on a few factors:

• Macroeconomic environment
• Development of Luna Classic Eco-system
• Differentiation versus competition

Among the above three factors, the macroeconomic environment is not in control of the Luna Classic Community. So let us focus on the other two

The Luna Classic Ecosystem

• Here is the latest list of Luna Classic Ecosystem. Many of them are not active on the Terra Classic blockchain. While a precise number is unavailable, it is unlikely to be in the double figure. On the other hand, the forked Luna 2.0 has a reasonably extensive list though it is doubtful that many are active there either. One of the agendas of the more technically minded community members was to find a way to ensure Luna 2.0 DApps were also present on Terra Classic. However, limited progress has been made as the top agenda item was moving Infrastructure control into the hands of the community. At the moment, there isn’t enough money to complete that transition.
• After some failed attempts, most community voices have returned to pushing for more burning. Given the results of the last 3 months, it isn’t very likely to yield results.

Differentiation

Without the ecosystem, there is no standout as far as Luna Classic is concerned. There are numerous tokens with better use cases and a focus on developing the ecosystem. There is increased pressure on new tokens to enable numerous use cases.

So at the moment, one can say with confidence that current community activities will NOT spur a recovery in Luna Classic price. Luna Classic could still recover due to market conditions improving but that would be in line with the market and not the outperformance as seen between May and September.

Will Luna Classic Recover? Community Discussion

• Luna Classic’s performance is strongly correlated to Trading Volumes which in turn is linked to news flow. No Positive news recently means that Trading volumes gave trended lower pushing the prices lower.

• Community Discussion – Twitter user 4lex_4sh4w has initiated a discussion about the state of the USTC token, suggesting a strategy to re-peg it.
  • He argues that this 70% does not include USTC held in the CP or oracle pool, which could also be burned.
  • If stakeholders want the USTC to re-peg, the user suggests two options: a) support the re-peg narrative and burn >90% of USTC supply to the burn address, or b) vote to burn 100% of the “zombie” USTC (those in defunct protocols) and most, if not all, USTC in community-owned smart contracts.
  • User DNC questions who else needs to be persuaded for this plan to work. 4lex_4sh4w responds that no one else is needed.
  • Another user, Markjo159, comments that if a Terra wallet holds the tokens, the community technically owns them, and he would be okay with this. 4lex_4sh4w agrees, stating that the community owns the tokens if they’re in a smart contract that isn’t under any individual’s control.

Read: Terra Luna Classic Price Prediction 2023, 2025, 2030 and 2040

Will LUNC Go Up? Analysis of recent performance

LUNC Monthly Performance

• December 2024: -28.1%
• January 2025: -30.2%
• February 2025: -5.8%
• March 2025: -11.25%
• April 2025: -6.5%

Will luna classic recover to $1, 1 Cent

Could Luna Go back up again?

3 major factors will determine if Luna Classic goes back up again

• Government regulation
• Macroeconomic Factors
• Token Utility

Potential Use Cases for Terra Luna Classic

Why Luna Classic should focus on DeFi

1. Historical reasons: The original Terra Luna was a huge player in DeFi until May 2022. Numerous DeFi players like Anchor and Risk Harbor lost massive value in the Crash of May 2020.
2. DeFi’s Growth opportunity is huge
   • The need for Decentralized finance (DeFi) will continue to rise not just in the United States but also all over the world as consumers look for ways to borrow money with the lowest hassle or invest in assets with the highest return and lowest risk. DeFi-based products are attempting to solve this problem. For example, traditional secured lending (Like borrowing against deposits or other liquid assets like shares or mutual funds) is under threat from DeFi-based lending. So, a consumer can borrow against their crypto assets for an unlimited period and a small fee as long as the value of their cryptocurrency is higher than the value of the capital borrowed.
   • In the same process, a person can also be involved in a form of lending (not P2P) by contributing to the lending pools and earning a healthy return.
   • Unlike traditional finance, the technology and algorithms along with proof of consensus validators run and operate this process as opposed to middlemen (and women) that drive many of these practices and processes in traditional lending companies and banks.

Can Luna Classic operate in the NFT Space?

Miata, an NFT Marketplace launched in November 2022 on Terra Classic. In two months, traffic on the website has been rising (even if it is minuscule).

MetaGloria another NFT game is set to launch on Terra Classic this year.

The Terra Classic blockchain is built using the Cosmos SDK. Binance, Crypto.com, and ATOM are also built using the Cosmos SDK. BNB is ranked 7th while Cronos is ranked 16th on NFT Sales. When compared with Solana, Cosmos is slower and also costlier. So while it is possible to launch NFTs on Terra Classic, there are better options in the market. That said, Cosmos is better than Solana on interoperability and that gives Terra Classic the edge.

So, Which Use cases should LUNC focus on?

The more influential folks in the Luna Community have been toying with the idea of accessing the DeFi apps already on the Terra Luna 2.0 platform. Some argue that it is quite straightforward and involves activating Inter-block communication (IBC). IBC enables the creation of cross-chain decentralized applications and the use of different blockchain networks to access different DeFi services. But in practice, this involves other blockchains willing to share access to these services both technically and as a strategy. At the moment, this is a work in progress.

NFT will continue to be of interest for Terra Classic but perhaps not its biggest strength.

Would Luna ever recover – New Government regulations?

Government regulation – With the crash of FTX in November and Luna earlier, there is an increased chance of Government regulation. The SEC vs XRP case will determine whether such regulation will come via court precedents or via new laws. New laws are likely to be focused on increased transparency on token ownership (KYC, Share), voting rights, and taxation. This will help well-designed tokens and impact many of the tokens that are adding zero value and /or are mostly owned by the Founders themselves.

Will Luna recover? Token Utility

• The community has organized well and has accomplished a lot of milestones between June and September. This included Getting new validators and working hard to get the governance mechanisms in place. The community is central to LUNC’s success. 
• However, the community has not accomplished much after Burn was rolled out. There is a need for capital to develop the ecosystem for developing and sustaining use cases in the blockchain. Many of the technical papers written by developers have not won the support of the community yet.

Will Luna Recover? What about Trading Volume?

Looking at the $LUNC volume data for the last 31 days, LUNC price is dependent a lot more on Market Sentiments rather than trading volume. This could imply that the risk of LUNC crashing is much higher than before should market sentiments turn bad. The good news is that the price has remained stable over the month.

In Sum, the chances of $LUNC recovering are good as the overall cryptocurrency market has also begun a path of recovery. However, should the community activities stall, it could end the cryptocurrency fairly quickly.

Note: Please consult a registered investment advisor to guide you on your financial decisions.