Terraform Labs has announced the termination of its operations and the implementation of a Terra upgrade that includes a significant token burn.
Terraform Labs has disclosed a significant governance proposition for the Terra blockchain, which has sparked debate within the crypto community regarding its potential impact.
If approved, the proposal is anticipated to increase the prices of the LUNA and LUNC tokens, marking the final chain upgrade under TFL’s direct supervision. It comprises numerous enhancements, such as a significant token burn proposal.
It is important to mention that the proposal has received the majority of votes as of the writing, with no votes submitted in favor of a “No” or “No with Veto.”
Terraform Labs’ ultimate upgrade proposal
On August 22, the Terraform Labs governance proposal, Proposal 4818, was initiated, and the voting period will conclude on August 29. The objective is to enhance Terra’s mainnet to version 2.12.4. This action is particularly noteworthy in light of TFL’s announcement that it is discontinuing operations due to an SEC settlement and the execution of its Chapter 11 plan.
The approval of this upgrade will mark the final development by Terraform Labs. In other words, the TFL will no longer provide support for future chain updates, and the future of the blockchain will be determined by community-driven initiatives such as the Phoenix Directive.
In the interim, enforcing a minimum commission rate of 5% for validators is one of the most significant components of this upgrade. This continues a previous governance decision made under proposal 4803, establishing the global minimum commission rate. It is important to note that the upgrade will guarantee that all current and new validators adhere to this rate, thereby improving the network’s integrity.
Nevertheless, the most significant change gathering momentum is the burning of Terraform Labs LUNA holdings. According to the bankruptcy court order, Terraform Labs intends to dispose of its LUNA by burning it. This would encompass assets secured in a vesting contract and destroyed immediately after the upgrade.
Furthermore, the TFL intends to resolve the issue of unlawfully minted assets and compromised wallets resulting from the IBC exploit. It will contribute to the irreversible removal of the assets from circulation, thereby demonstrating a commitment to the safety and transparency of users.
The upgrade also includes the eradication of the blacklist functionality, which is another substantial change. It was initially implemented to prevent the IBC perpetrators from withdrawing more.
Prices of LUNA and LUNC to Increase?
Investors and the Terra community have been encouraged by the decision to expend a significant quantity of LUNA. The circulating supply is typically reduced by token fires, which can result in upward pressure on prices if demand remains constant or increases.
However, due to TFL’s most recent announcement, there is considerable speculation that LUNA and LUNC may experience a substantial price spike. It should be noted that the proposal received 98.55% of the total ballots, with only 1.45% of the votes being cast in favor of abstaining.
In the interim, the Terra blockchain’s viability will increasingly depend on community-led initiatives as TFL withdraws. The Phoenix Directive, slated to assume operational responsibilities, will be instrumental in the network’s development.
Nevertheless, the price of LUNC was down nearly 5% to $0.00008412 at the time of writing, and its trading volume had decreased by 52.56% to $17.81 million in the past 24 hours. On the other hand, the LUNA price declined by 3.83% to $0.3707, following a high of $0.3889 in the previous 24 hours.
CoinGlass data indicated that the LUNA Open Interest (OI) decreased by over 7% to $4.96 million, while the LUNC OI plummeted by 11% to $7.57 million. These developments occurred concurrently. Despite the recent downturn momentum, the community anticipates a price rebound due to optimism regarding the forthcoming significant token fire.
