In May 2022, over ***** billion Terra Classic – the 1.0 version of LUNA - tokens were issued and went into active circulation in a few days. The cryptocurrency’s built-in algorithm triggered this correction following the coin’s significant price drop that month. Terra’s algorithm would "burn" (permanently destroying) LUNA so that it created something else instead: TerraUSD (UST), a stablecoin within the same blockchain. This automated system was meant to keep the price of UST level, potentially avoiding economic sentiment. Because of this initial promise of stability, Terra and its two coins initially played a significant role in crypto lending. The poster child of algorithmic stablecoins Up until May 2022, TerraUSD (UST) was the biggest stablecoin that functioned with an algorithm. At the end of April 2022, the market cap of TerraUSD – now TerraClassicUSD – was *** times larger than what it was one month later, comparable in size to Binance USD. Algorithmic stablecoins are relatively new and, as most stablecoins, have an external asset as collateral. Several of the biggest stablecoins in the world, for example, are backed by real-world U.S. dollar assets, such as cash or securities. Others – such as DAI – rely on the backing of other cryptocurrencies, such as Ethereum (ETH). TerraUSD had little to no backing, relying on a closed ecosystem. Reset or revival: The LUNA (2.0) aftermath Terra got reset on May 28, 2022: A new *** coin released – taking over the Terra (LUNA) name - whilst the "original" crypto was abandoned and became Terra Classic (LUNC). TerraUSD (UST) remained but became TerraClassicUSD (USTC). Several of the *** LUNA holders, however, hoped for a different solution, rather seeing the (***) coin’s supply be bought back by the company who issued them. The company would then burn them, hopefully restoring the price of the original LUNA. Do Kown, the CEO of the Terra system, stated his company did not have the funds for such a big undertaking. He instead shared a blockchain address on Twitter where individuals could burn their tokens themselves. By June 2022, roughly **** LUNA tokens were destroyed that way – a burn rate of roughly ***** percent compared to the overall circulating supply.

The number of LUNA burned jumped significantly in October 2022, after Binance burned 5.5 billion tokens or 0.08 percent of the coin's circulating supply. This according to data from within the Terra blockchain, specifically an old address shared by LUNA CEO Do Kwon where users could send tokens to see them burned (permanently destroyed). The address was shared after The circulating supply of Terra (LUNA) - renamed Terra Classic (LUNC) since late May - grew by trillions as the cryptocurrency's algorithm tried to account for a significant price fall. Several crypto holders hoped that Do Kwon's company would buy the LUNA token back from them and remove them from the supply entirely - meaning Terra's price would be restored. The CEO shared his company would not be able to do such a thing - citing it was too vast of an undertaking - but provided an option for those who wanted to burn coins either way. By the end of June 2022, over one billion tokens - or 0.017 percent of all the LUNA/LUNC that exists - had been sent to that address by the end of June 2022. The price of Terra (LUNA) did recover on certain days, but was not close to the parity it originally desired.

In May 2022, the value of a single LUNA (version 1.0) declined by over 50 percent per day, as prices fell significantly from one day to the next. This is a significant difference from earlier in the year, when the price of the Luna token within the Terra (Classic) network grew by roughly 100 percent between January and March 2022. This popularity was reflected in a ranking covering the world's most traded cryptocurrencies - where the relatively young crypto first showed in the top 10. The popularity of Terra and its cryptocurrencies LUNA and UST (TerraUSD) - from May 2025 referred to as Terra Classic - comes from its role in crypto lending and the interest rates promised by lending platform Anchor Protocol, a platform built off the Terra network.