Binance delists LUNA while Terra proposes token burn to save UST

The world’s largest exchange has delisted LUNA from the Binance Futures platform. Leverage in USDT-Margined LUNA Perpetual Contracts has been reduced to 8x. 

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LUNA suffers delisting despite Do Kwon’s recovery efforts 

Binance, the world’s largest cryptocurrency exchange, announced the delisting of LUNA futures on May 12, 2022, at 8:00 UTC. The exchange had temporarily suspended the withdrawals of Terraform Lab’s tokens LUNA and UST after the algorithmic stablecoin lost its peg. 

Binance Futures will automatically settle Coin-Margined LUNA Perpetual contracts and advise users to close open positions before the delisting. The exchange has updated the margin tiers of the USDT-Margined LUNA contracts and reduced maximum leverage to 8x. 

Do Kwon, the CEO of Terraform Labs, announced a recovery plan for LUNA and UST. Kwon proposed mass burning of UST to decrease the algorithmic stablecoin’s supply and stabilize its $1 peg. Despite the Luna Foundation Guard council’s recovery efforts, UST has reclaimed $0.60. 

UST price posted 48.5% gains overnight as the LFG burned the algorithmic stablecoin at a fast pace to reestablish the peg. In a proposal to token holders, the council proposed a 1 billion UST burn, worth nearly $690 million. The massive burn of UST would pull the stablecoin out of circulation and reduce the selling pressure on TerraUSD. 

The proposal reads:

Currently, the burning of UST is too slow to keep pace with the demand for excess UST to exit the system, which is hindered by the BasePool size. Eliminating a significant chunk of the excess UST supply at once will alleviate much of the peg pressure on UST.

LFG’s recovery plan and a drastic reduction in UST supply have failed to defend against the delisting of LUNA across exchanges like Binance Futures.