LUNA vs LUNC: Differences explained

The new chain retained the LUNA token, whereas the native cryptocurrency of the old chain was renamed Luna Classic (LUNC). Let's have a look at the differences between these two coins.

Of course, the biggest difference between the two coins is their origin. LUNC is the native cryptocurrency of the old Terra network. It was launched in 2018 and was known as LUNA at the time, before taking on the LUNC tag after the Terra crash.

On the other hand, LUNA is the name given to the native token of the new offshoot blockchain, which was launched on May 28, 2022. It was distributed to the existing holders of UST and LUNC through an airdrop.

Along with Luna Classic, the old Terra network also retained its stablecoin, now operating under the name TerraClassicUSD (USTC). USTC depends on the supply of LUNC to build and maintain its valuation with the U.S Dollar.

LUNC is minted when USTC rises above $1 and burned when it dips below. An algorithm determines whether LUNC needs to be burned or minted, depending on the price of USTC. That's why it is called an algorithmic stablecoin.

On the other hand, Terra 2.0 cut ties with the UST stablecoin after the hard fork. The decision to halt the stablecoin project could be the result of lawmakers coming down hard on the algorithmic stablecoin model.

After the Terra crash, several cities and countries made it mandatory for stablecoins to maintain a reserve of the currency they are pegged to. This physical reserve can help avert similar meltdowns in the future.

As mentioned earlier, TerraClassicUSD (USTC) depends on a mint-and-burn mechanism to maintain its valuation. After the Terra crash, USTC lost almost 100 percent of its valuation, trading at $0.0081 on May 22.

However, the Terra community has been trying to revive the dying project after the hard fork. One of the many initiatives they have started is an enforced LUNC burn mechanism.

The project has levied a 1.2 percent burn tax on all on-chain LUNC transactions. Project devs will send the amount collected from this tax to a burn address to be permanently removed from circulation.

This will help prop up the price of LUNC, which will, in turn, create price momentum for USTC. So far, the initiative has shown some signs of growth, with USTC seeing price spikes over the last couple of months. On the other hand, the new cryptocurrency of Terra 2.0 has no such burn mechanism.

This is another major difference; both coins have very different tokenomics. LUNC, the token linked to the Terra old chain, was trading at $0.0002874 at the time of writing, with a circulating supply of 6.1 trillion tokens and a market cap of $1.7 billion.

On the other hand, LUNA, the token linked to Terra 2.0, was trading at $2.71 at the time of writing. It has a circulating supply of over 127 billion and a market cap of $345 million.

While the differences are many, the two coins do share one thing: the massive FUD (fear, uncertainty and doubt) that surrounds them both. After the Terra crash, the project's founder, Do Kwon, was declared a wanted man.

His whereabouts are currently unknown, and he is believed to be on the run from South Korean and Singaporean lawmakers, not to mention the Interpol. As such, the fate of both these seems unclear.