The Luna circulating supply is playing a major role in the unprecedented Luna crypto crash, as an enormous amount of Terra Luna entered circulation.
The unprecedented collapse of Terra has seen the price of Luna and TerraUSD collapse, leading to some huge Luna delistings. At the time of publication, the Terra LUNA is sitting at a market cap of $1.2 billion. Its price has plummeted to $0.00018.
However, in the latest Luna classic news, The LUNC token has magically soared past 60% after it received a new V22 update.
As users speculate about how a Luna recovery could happen, let's look at how the Luna circulating supply fits in.
Luna Circulating Supply
The Terra Luna crash saw the Luna circulating supply increase from a supply of 345 million to 127,475,474.31 Luna
Before the dramatic price collapse, Luna's circulating supply was in the range of 340 million to 350 million. However, on May 10, this jumped to 386 million, before hitting 1.5 billion on May 11.
By May 12, this circulating supply was at over 176 billion. And now, on May 24 the circulating supply has soared to a whopping 6,536,027,223,716 Luna. (via Terra.dev) This is an increase of 1,867,340% in under a month.
To reduce this circulating supply, many Luna holders are calling for a massive Luna burn by taking coins out of circulation.
However, with a Luna fork proposal looking like the way forward for the Terra ecosystem after Do Kwon's plan, this supply could soon drop to 1 billion with the new Luna 2.0.
Luna Classic, however, would remain with this 6.5 trillion supply.
- Now Read: Where To Buy Luna: How To Buy Terra Luna After Collapse
Why Has The Luna Circulating Supply Increased?
As with many elements of the Luna collapse, the Luna circulating supply increased because of its relationship with TerraUSD (UST).
The way the algo-stablecoin UST works is that 1 UST could be traded for $1 worth of Luna, which would see that Luna then minted. It also goes the other way, with trading Luna for UST seeing the Luna burned. This relationship was designed so that UST would remain pegged to $1.
As UST lost its peg, however, holders rushed to sell. As they sold, it also minted more Luna and added to the circulating supply. But as they also then sold Luna, the price of Luna then dropped further. This meant that for every 1 UST sold, more Luna would need to be minted.
To give an example, if 1 UST was sold when Luna was at its all-time high of $110, it would mint just 0.009 Luna. However, swapping 1 UST for $1 worth Luna at the price of $0.00016 - its current price - would mint 6136 Luna. Now extrapolate this across a $1 billion trading volume, and you can see why the supply rose so fast.