Earlier Thursday, The Block reported that the circulating supply of Terra’s native asset, Luna, had ballooned amid an escalating behavioral cycle.
As of around 11:15 a.m ET, that figure stood at roughly 25 billion LUNA. Now, that figure is approximately 401.6 billion, according to data from Terrascope. That represents a change of more than 225 billion LUNA on May 13 alone.
The state of affairs has to do with the embattled algorithmic stablecoin TerraUSD (UST) and the redemption mechanism by which they can swap UST for LUNA. As The Block’s Tim Copeland explained in his earlier reporting: “As holders redeem UST for Luna, they increase the supply of Luna and likely sell these tokens on the market. This puts the price of Luna down even further, meaning the next person to redeem their UST creates even more Luna — putting an even greater downward force on the market.”
As such, the price of LUNA has fallen dramatically in the past hour, hitting a low of $0.00004 on Binance. The token is currently trading at $0.00005. Binance’s LUNA/USDT order book shows the lowest buy order as $0.00002.
Following the publication of this report, Binance announced that it was halting the trade of LUNA across most of its spot trading pairs, including LUNA/USDT and LUNA/BTC. Binance will continue to allow trading of LUNA against Binance USD and UST.
Updated with Binance announcement.