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In this article, You will read all about burning luna and its effects on Terra ecosystem. I will Find the week that the most volume of Luna burning happened. Do you think What caused this event? I went through that this event and find what its effects on the Terra ecosystem.
All data in this presentation is from Terra's inception.
“Burning” crypto means permanently removing a number of tokens from circulation. This is typically done by transferring the tokens in question to a burn address, i.e. a wallet from which they cannot ever be retrieved. This is often described as destroying tokens. A project burns its tokens to reduce the overall supply.
As you possibly know, Any swaps in Terra swap cause mint and burn. When Luna swapped to UST in Terra swap caused burning Luna and minting UST. So I used the Terra swaps table and find any swaps between Luna to UST. Then I summed the total amount of Luna. I draw a series of charts to understand the burning mechanism better.
You can see the Daily, Weekly, and monthly burnt Luna amounts in the below charts. I divided it into three charts to understand numbers and differences better. Let's see the first chart and you will read the analysis in the following chart.
In the below chart, you can see the total weekly amount of Luna burnt. As you can see clearly, Second and third weeks of November 2021, The highest amount of Luna was burnt. About 49M Luna was burnt from November 15th until November 22nd.
The second highest Luna burnt happened from November 8th until November 14th with 42M burnt.
There isn't any significant amount of Burn after November. They are as usual as on regular days.
But if you look at the below chart again, You can see in the second and third weeks of March 2021, a high amount of Luna burnt activities.
Let's back to the main question. Do you think what happened on November 15th, 2021? Why was the highest amount of Luna burnt that week? So far we know that swaps between Luna to UST cause burning LUNA. So it seems a lot of Luna swapped to UST. But Why? I will answer this question later.
We want to know that when the total amount of Luna burnt increased, is the total number of swaps increased too or not? As you can see in the below chart, the total number of swaps didn't change too much in November. So something else happened.
Until May 1st, 2022, More than 503M Luna was burnt.
I'm looking for a cause for why 49M luna burnt from November 15th until 22nd, 2021. The answer is in the below Terra Tweet. The Terra ecosystem decided to burn about 88M of Luna. This event happened from the second to the third week of November 2021.
The most effective of Luna burnt is that the price of Luna started to increase significantly after that week. On November 15th, the price of Luna was about 40$. After that, Luna broke its all-time high and reached 91$. It seems they boost their network by doing that.
Written by Hess
where
discord_id: hess#0890
and
twitter_id: @hessaminanloo
As a result of burning Luna, The total supply of UST in the Terra network increased since November 15th. The total amount of UST was about 2B dollars, and right now is about 21B dollars.
As a result, a Burning circulation token is a good event for a project. So it impacts All ecosystems. We can see the price of Luna increased after that event.