Terra Luna Classic

Terra Luna Classic is the original Terra blockchain, renamed after the network's collapse in May 2022. Terra was a payments-focused chain built around algorithmic stablecoins, of which the largest was UST, pegged to the US dollar. LUNA, now LUNC, was the reserve asset that absorbed volatility to keep that peg.

The mechanism worked by allowing one dollar of UST to always be swapped for one dollar worth of LUNA and vice versa. If UST traded below a dollar, arbitrageurs could buy it cheaply, redeem it for a dollar of newly minted LUNA, and profit, which removed UST from supply and pushed the price back up. That design held for a period of rapid growth, helped by a lending protocol offering a high fixed yield on UST deposits.

The collapse

In May 2022 a loss of confidence triggered large-scale UST redemptions. Each redemption minted new LUNA, and as LUNA's price fell the amount minted per redemption grew, creating a feedback loop. Within days LUNA's supply expanded from hundreds of millions to trillions of tokens and both assets lost nearly all their value. The event erased tens of billions of dollars and contributed to the failure of several major crypto lenders and funds.

The chain today

A new chain, Terra, was launched with a fresh LUNA token, while the original became Terra Luna Classic with the ticker LUNC. It continues to run, maintained by a community rather than the original organization, with total supply at roughly 6.45 trillion tokens reflecting the hyperinflation during the collapse. Community governance has implemented a transaction tax that burns a portion of each transfer, aimed at reducing that supply over time.

The project's founder faced criminal charges in multiple jurisdictions following the collapse.