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This dashboard looks at the week where the greatest volume of LUNA was burned and what effects it had on the Terra ecosystem.
Price stability of Terra's stablecoins, such as UST, is achieved through the minting and burning of its governance token, LUNA. When the price of UST drops below its peg of $1, users can take advantage of the arbitrage opportunity by burning 1 UST for $1 worth of LUNA. When the price of UST is above $1, then LUNA holders can burn $1 worth of LUNA to get 1 UST. This method takes advantage of market forces and arbitrage incentives to keep the peg of stablecoins.
This graph looks at the weekly volume of LUNA burned over the past couple of years. By far the greatest spikes in LUNA burning were in November of 2021, where the week of November 8th ~42 million LUNA was burned, and the week of November 15th over 50 million LUNA was burned. Next, we will look to see the effects of this massive spike on the price stability of UST.
Interestingly, we can see that one of the greatest price spikes in UST occurred in November of 2021, where the price of UST increased to $1.002, or about .2% off peg.
In conclusion, the two weeks that saw by far the greatest amount of LUNA burned were the weeks of November 8th and November 15th of 2021. This massive spike in LUNA burning also coincided with a relatively large spike in the price of UST, moving it about .2% off of its peg.