The circulating supply of Luna (LUNA) surged to more than 6.5 trillion by the time the Terra blockchain was halted for a second time in an attempt to salvage the collapsing ecosystem.
For the last few weeks — up until just three days ago — the supply of Luna was only around 340,000, according to data from Terra Analytics. That was until TerraUSD (UST) lost its peg to the dollar on Monday, kickstarting a downward spiral for Luna, a related token that was supposed to prop up UST’s value.
Under the design of UST, sales of Luna were supposed to help the algorithmic stablecoin keep parity with the US dollar. But once UST lost its peg and investors tried cashing out en masse, the mechanism put a lot of downward pressure on Luna. Worse, the more Luna’s price went down, the greater the downward pressure. This created a vicious cycle that crushed Luna’s price and made its supply accelerate on an exponential scale.
On Tuesday, the network issued 40 million Luna tokens. On Wednesday, the circulating supply of Luna started ramping up and reached 1.5 billion tokens. On Thursday, this reached a new level as it shot up to 176 billion tokens, despite the chain being halted for a short time. It reached 6.5 trillion today and would still be growing had the chain not been halted for a second time.
With the supply increasing by nearly 17,000 times in just three days, developers working on Terra finally called it a day and decided to halt the blockchain early Friday morning until they figure out a way to revive the project.
“Terra Validators have halted the network to come up with a plan to reconstitute it,” said Terraform Labs on Twitter.
This supply shock has been pounced upon by Bitcoiners, who point to bitcoin’s supply with its fixed emission schedule that will taper out at around 21 million coins.
“In case you’re wondering what the Weimar hyperinflation was like, Luna is a lot like that,” Nic Carter, a partner at Castle Island Ventures, said on Twitter, referring to the inflation witnessed in Germany’s Weimar Republic in the 1920s.
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