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Will Validators Threaten Terra Classic (LUNC)?

Key Takeaways
  • Terra Classic supporters worry about the expanding number of zero-commission validators.
  • After burn mechanism disputes and governance suggestions, the network faces a major challenge.
28 Feb 2023 By: Anirudh Trivedi
Will Validators Thre

Supporters of Terra Classic have expressed concern about the growing number of validators who are offering zero commissions.

The $60 billion-plus implosion of the Terra ecosystem in May of last year exposed weaknesses in the cryptocurrency industry's structure and set off a year of spiralling financial disasters that haven't yet subsided. Despite many flaws and shortcomings, the Cosmos-based network created after the Terra ecosystem collapsed has managed to thrive and support itself in the larger crypto market.

The main issue with LUNC

The network still has to overcome a significant obstacle after debates on the burn mechanism and several governance proposals. Although there are already a decent amount of validators on the network, it is increasingly becoming a cause for concern regarding their development.

The most important problem affecting Terra Classic (LUNC) right now, in the opinion of Classy Crypto, a supporter of LUNC who also happens to run a validator node on the network, is the sudden increase in validators offering staking services at zero-commission.

He notes that a validator offering no commission translates to zero development, which negatively impacts smaller validators and causes them to go out of business. Most of the time, validators won't charge any commission in an effort to draw in more users who are interested in staking on the network and earning rewards.

Problems with LUNC's Validator

A few newer validators who increased the commission amounts from 0% to 20% without informing their delegators have received criticism from LUNA validators PFC, Lavender.Five, and Red Herring in the past. Larry, a Delphi Digital engineer, claims that after receiving the 2.5M LUNA genesis delegator attribution, LUNC validators can make up to $192k year.

It was found that three other validators, Luna Whale, Lunatic Validator, and Long Live Luna, were involved in unethical activities besides increasing their commission without informing their community. Red Herring even offered specifics about how each of the three validators was set up and mentioned a number of odd behaviours.

The price of LUNC is currently trading at $0.0001625, a reduction of 0.53% over the previous 24 hours compared to a decline of 4.29% over the previous seven days.