**Token Consolidation & Supply Adjustment for Terra Classic**

General
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Token Consolidation & Supply Adjustment for Terra Classic

Background

For over three years, the Terra Classic community has been working tirelessly to reduce the enormous token supply created during the collapse of the original Terra blockchain. At present:

  • LUNC Total Supply (TS): ~6.48 trillion

  • USTC Total Supply (TS): ~6.09 billion

Through the introduction of the burn tax and community-led burn initiatives — with vital contributions from external entities such as Binance, MEXC, WEX, Terra Casino and other projects, and many independent community members — we have managed to burn around:

  • 6%+ of LUNC Total Supply

  • 45%+ of USTC Total Supply

These results are highly impressive, but the community consensus remains clear: the circulating supply of both tokens is still far too large, and further reductions are necessary if Terra Classic is to rebuild trust, attract new investors, and continue its deflationary narrative.

At the same time, Terra Classic faces the challenge of maintaining the Oracle Pool (the “heart” of the chain). Because we operate as a deflationary chain, our current funding mechanism (via burn tax) cannot indefinitely sustain PoS security, Oracle rewards, and development. Yet, the community has strongly opposed any reminting of tokens. This creates a unique challenge: reduce supply while ensuring the chain remains financially sustainable.

It is important to recall history: Terra (Luna) once had a market capitalization above $40 billion. Following the depeg and attack on the Market Module (MM), the mechanism minted enormous amounts of LUNA overnight — from ~300 million supply to nearly 7 trillion. The original developers abandoned the chain, but the community has carried it forward ever since.

This proposal builds on that legacy and introduces a new idea.

Proposal: Token Consolidation (“Reverse Split”)

We propose implementing a token consolidation event (similar to a reverse stock split in traditional finance). This process would reduce the visible token supply of LUNC and USTC while maintaining each holder’s proportional ownership.

Initial Proposed Reduction (to be reviewed and verified):

  • LUNC: Decrease supply to Total supply of ~700 billion

  • USTC: Decrease supply by to Total supply of ~68 million

  • In this example, the C.P. and O.P. are not included.

The exact parameters must be studied carefully with validators, developers, and CEX partners to ensure technical and economic feasibility.

Expected Impacts

  1. Price Impact

    • Consolidation would decrease the total supply, potentially improving market perception and attracting renewed external interest.

    • If token prices rise significantly, network fees may need adjustment to maintain usability.

  2. Ecosystem Effects

    • Must carefully evaluate effects on bridges, IBC channels, and centralized exchanges.

    • This step could also help scale Market Module 2.0 experiments and provide sustainable funding through normal transaction fees and MM² mechanisms, rather than continued reliance on a burn tax.

  3. Oracle Pool & Rewards

    • Token consolidation, if coupled with MM² and transaction fees, could alleviate Oracle Pool depletion without minting.

    • Rewards distribution from the Oracle Pool will need to be adjusted to reflect the new tokenomics and to ensure delegator incentives remain fair and sustainable.

  4. Community Incentives

    • To encourage long-term on-chain participation, users with funds staked or in liquidity pools on Terra Classic would receive a eg 10% higher conversion rate compared to off-chain holders (CEX wallets).

    • This ensures fairness, rewards community loyalty, and strengthens on-chain activity.

  5. Exclusions

    • Oracle Pool (OP) and Community Pool (CP) funds should not be subject to burning or haircutting.

Next Steps

This could be carried out in stages, similar to how Binance handles BNB burns, in order to reduce the risk of pump-and-dump activity.

This is an idea-stage proposal. If the community is open to pursuing this option, the following steps will be required:

  1. Technical Study – Developers and validators must model the consolidation mechanics and confirm feasibility.

  2. Economic Study – Assess impacts on exchanges, bridges, tokenomics, and potential price implications.

  3. Oracle Pool Adjustments – Determine how rewards distribution should change post-consolidation to ensure validator/delegator participation and network security.

  4. Community Feedback – Engage all stakeholders to refine numbers, methods, and incentive structures.

  5. Testnet Trial – If viable, implement in testnet before mainnet deployment.

Closing

This proposal is not final but serves as a starting point for discussion. By consolidating supply, adjusting Oracle Pool rewards, rewarding on-chain users, and aligning incentives, Terra Classic can address the legacy of over-minting, strengthen Market Module 2.0, and secure long-term sustainability of the Oracle Pool — without reintroducing inflation.

If the community supports exploring this path, further technical and economic studies will follow to finalize details.

For now: this is a concept to be debated, improved, and potentially adopted if consensus is reached.

1 Like
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To me this is just us re-shuffling the same deck of cards again but expecting a different result.

We should focus on creating real value.

1 Like
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Consolidation was always the expedient way to reduce the supply of LUNC and USTC. This was suggested as the way forward by various members of TR team in the early days following the depeg (including myself and Zaradar), but at the time the burn narrative had managed to capture people’s imaginations, and nobody was interested in consolidation ideas.

Consolidation is supposed to be a financially neutral event - the price must automatically adjust upwards (through cooperation with all market providers to participate in the consolidation event), in proportion to the reduction in supply, so that the overall position of holders remains unchanged at the time the consolidation is completed.

I question why you have chosen such a small reduction in the LUNC and USTC supply - it hardly seems worth the effort for a 700B reduction in LUNC supply and 68M reduction in USTC supply. I think you need to be far more ambitious in the size of the reduction of both coins.

In any case I support this concept as the most effective and expedient method of reducing the supply of both native coins.

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i adjusted, was wrong , tks for pointing that . Initial Proposed Reduction (to be reviewed and verified):

  • LUNC: Decrease supply to Total supply of ~700 billion
  • USTC: Decrease supply by to Total supply of ~68 million
1 Like
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Lo que quieres hacer es que los inversores pierdan más dinero en virtud de los stakers y válidadores ? Las recompensas se agotan como pasa en todas las cadenas. El problema no es APR es la usabilidad y el volumen. En cualquier caso la resolución del caso de la sec contra tfl y ust repondrá el fondo de recompensas. La fecha es el 16 de noviembre,verdad? Esperemos que Rex Wu no vuelva a parar la resolución del caso y que la volátilidad vuelva a lunaclassic. Esto será determinante ya que muchas ballenas y el inversor presemilla surcoreano no ha movido ni un centavo al igual que muchos otros que han sido investigados. Si se cierra el caso no habrá tanta liquidez muerta en cadena. Muchos fondos se quemarán.

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Además de ser una manipulación total del precio y del suministro. Crees que los exchanges y liquidity providers aprobarían esa propuesta? Yo creo que directamente recuperarían los fondos y directamente dirían adiós a esta cadena. Porque siempre a favor de los válidadores y stakers y en contra de traders,liquidity providers…porque dais por hecho que quieren financiar esos fondos. Nunca habéis pensado que por eso prefieren otras cadenas? Ya va siendo hora de eliminar la burntax y de qué las tarifas de gas sean las que reponen los fondos. Una división inversa no genera valor,no es utilidad.

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The problem here isn’t that we aren’t inflationary (or are deflationary), the problem is the funding mechanism is insufficient. Consolidating the supply doesn’t fix this problem.

Be aware that this can be easily gamed as-written (you can deposit on-chain, receive the conversion rate, then withdraw post-vote)

Do you mean to say that the Oracle Pool and Community Pool would not be subject to the consolidation?

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I have to say that this is the first non-spam/scam proposal I feel a strong urge to veto.
This is because I think it could pose an existential risk to the chain.

  1. A reverse split is not something to take lightly. It has significant impact on all involved parties.
  2. The value of the token is unlikely to raise an equal amount in value to even out the loss from the split. As an example (I know that value is much lower in the proposal): If you split 1:2 you need a 100% rise in value to have the same value in the wallets again.
  3. The CP and OP are excluded which is a hidden minting and will be easily seen as a money grab. Imagine your tokens are cut by X% and the protocol itself keeps all its tokens. It’s the same effect as if they would mint Y% to the protocol wallets.
  4. The outside perception of this even being seriously considered could already be really negative. The split could maybe have worked immediately after the crash when the chain was “reborn” in a sense.

All in all this, to me, is really bad to even consider.

2 Likes
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Removing three zeros may be cosmetically attractive, but coordinating that across all CEXs is non-trivial (frankly, a fork might even be simpler operationally).

My main concern is the Oracle Pool. If you keep the Oracle Pool unchanged at ~60B LUNC (≈10% of total supply) while shrinking circulating supply via consolidation, then:

  1. What is the implied annual inflation rate required to keep validator/delegator rewards flowing?
    It looks like inflation would rise materially, and our deflationary narrative would evaporate.

  2. Past staking rewards get devalued in percentage terms. After the split, reward rates and shares would have to be recalibrated; otherwise prior returns are diluted relative to the new supply structure.

My view: Instead of engineering supply optics, adjust the tax upward and route a larger share directly to the Oracle Pool. That keeps funding transparent, preserves the deflationary thesis, and avoids stealth inflation through reward mechanics.