Terra Community Unanimously Votes to Burn 1.3 Billion UST Tokens
So, in a desperate attempt to help its stable coin regain its peg, Terra community unanimously voted to burn a large amount of UST. The governance vote on Terra’s proposal 1747 has been passed to burn 1.3 Billion UST tokens.
Following the collapse of Terra, the infamous founder of Terra Do Kwon purposed that a solution to Terra woes might be to absorb the excessive supply of its stable coin. So, in response the community floated a 1 Billion UST burn proposal from Terra’s community pool and cross-chain bridge on Ethereum.
The proposal was submitted on May 12 and due to be voted on in seven days, but couldn't go ahead because of mismatch between UST amount mentioned in proposal and Terra’s community pool & cross-chain bridge. This happened because another proposal got approved in the mean time that took some UST out of circulation casing a mismatch. So a new burn proposal was submitted on May 20 and it got passed after seven days.
Out of total 154,644,852 votes casted 99.39% voted in favor of burning, 0.60% voters abstained and a very small amount voted against burning.
So, 1.388 Billion UST to be burnt accounts for 11% of total UST supply of 11.28 billion. Out of 1.388 Billion UST slotted for burn, Terra community pool holds 1.017 billion UST and the remaining 371 million UST will come from cross chain bridge on Ethereum.
The burn proposal states, the burn will help reduced the pressure from the pinned down stable coin. The high reward for onchain-swaping UST to Luna has been putting extreme burden on Terra ecosystem. And since the normal burn rate is too slow to alleviate the pressure so a manual burn is essential.
The state Terra ecosystem and its stable coins UST are in, I guess its gonna take a lot more burning. What will be the impact of the recently approved burn proposal, I guess we are gonna find out soon!
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