The proposal highlights that the burn could help restore the peg to the US dollar by burning off excess supply.
In another attempt to support the revival of Terra (LUNA), the community voted to burn a large amount of UST from their community pool.
In early May, Terra founder Do Kwon stated that one possible solution to the Terra fiasco is to absorb the supply of stablecoins. In response, users offered to burn the 1 billion TerraUSD (UST) stored in the Terra community pool and the remaining cross-chain UST used as an incentive on the Ethereum blockchain.
According to the proposal, the incineration would help “reduce the bad debts of the Terran economy.” Additionally, it is expected to also play a significant role in restoring the peg to the US dollar by removing much of the oversupply.
The proposal was submitted on May 12 and should be completed in seven days. However, it could not be completed due to a discrepancy between the UST amount in the community pool and the proposal. This is due to the execution of another proposal, which removed part of the funds from the pool.
Despite this, on May 20, the municipality presented another proposal to continue the burning. Finally, after seven days, the proposal passed by a majority of 153,644,852 in favor of burning UST shares.
Related: Exchanges show initial support for Terra resurgence by listing new LUNA tokens
In addition to active community efforts to support the project, crypto exchange MEXC Global also pledged to buy back and burn LUNA within a month. The exchange platform has committed to using the trading fees received from the new LUNA/USDT spot pair to buy LUNA and send it to the burning wallet address.
Although Kwon shared the burning address with the Terra community, he does not support burning. The notorious Terra founder warned LUNAtics against sending LUNA to a burning address. According to Kwon, burning does nothing. He told users that “nothing happens except you lose your tokens”.