A sudden spike in the market has been leaving investors surprised: LUNC
With high volatility showcased by cryptocurrencies over the last few weeks, it has become extremely difficult to speculate the price of tokens correctly.
Clearly, this hasn’t stopped a massive chunk of investors from getting into several projects, thanks to the discounted prices on almost every token. With BTC trading at around $20,000, much lower than its all-time high of more than $67,000 in 2021, even major organizations and financial institutions have been looking to park their funds into these digital assets.
One token that has been surprisingly getting a boost in price movements is LUNC. The growth of LUNC over the past two days has left several people wondering about whether to invest in the project or not.
What is LUNC?
Launched in 2019 by Daniel Shin and Do Kwon, LUNC was originally known as LUNA. The token was created to support its parent organization Terra, which was a blockchain platform and payments platform. It focused on utilizing algorithmic stablecoins and was very popular since its inception.
The project had managed to amass a huge community and was one of the top cryptocurrencies at its peak, placing it as the 7th largest token by market cap. The 2021 bull run saw LUNC( then LUNA) shoot up in price exponentially. It had gone from being barely worth $1 at the start of 2021 to more than $110 in March this year.
The token was primarily created to support Terra’s stablecoin UST; to act as a regulator in keeping the price in check.
What happened to it?
UST, Terra’s stablecoin was not pegged by any stable reserve asset like USD or gold. It was pegged by LUNC, which had a chance of dropping considerably causing a disbalance in the ecosystem. The proper balance of both tokens was essential to sustain the Luna protocol. It went smoothly for a long time too, before things went south for the project.
The working of the Luna ecosystem was that every time LUNC would be bought, an equivalent amount of UST would be minted. In the same way, whenever UST was bought, LUNC would be burned, thereby increasing demand and value for the LUNC token. This method was then considered an innovative approach and was embraced by many.
However, once the bull market seemed to be over, and social media platforms started to become bearish on the industry, the LUNC(then LUNA) token started to drop at an alarming rate. This quick drop in price caused UST’s price to go from a stable $1 to a few cents. Eventually, the arbitrage opportunity was exploited by several people, bringing down the entire project.
Since the crash, the CEO of the project DO Kwon came up with solutions to tackle the situation. The final solution was to create a LUNA 2.0 version and continue the original LUNA token as Luna Classic or LUNC
While LUNC may have crashed in the past, it has still managed to retain a huge chunk of its dedicated community, regardless of criticisms. LUNC is still a high market cap coin and has a team that has been publicly making developments for the welfare of its investors.
While there definitely is hope for the token, investors speculate the token to reach $1 at some point. This is extremely unlikely, as the market cap would need to be several trillion dollars to be LUNC to be worth $1.
While the token has already spiked up in price in recent days, a steep growth may not be visible in the future unless it is backed by strong developments or major announcements.