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After the proposed burning tax of 1.2% of the value of each LUNC transaction, Binance exchange has the first official responses.
Terra Classic community proposes burning LUNC
The collapse of the LUNA – UST model in May 2022 led to landmark changes to the Terra ecosystem. To save the disaster, the project team decided to restart, still using the name Terra for the new blockchain and LUNA for the new cryptocurrency but no longer stablecoin UST. However, except for the name change and listing on some exchanges, Terraform Labs has not shown any further development since the end of May. According to the most recent statement, CEO Do Kwon is on the wanted list of the company. Interpol, received an arrest warrant from the Korean Court.
The old blockchain was inflated, renamed Terra Classic and the old LUNA is now LUNA Classic (LUNC), stablecoin UST changed to USTC. Although these are eventually handed over to the management community, the problem of the near-infinite pumped LUNC total supply has not yet been resolved.
By the beginning of this September, the Terra Classic community has jointly submitted and approved two Proposals 3568 and 4159. Specifically, they want to apply the burning of 1.2% of the value of each LUNC transaction on the Terra Classic network to create deflationary pressure, bringing the total supply of LUNC to a fixed level of 10 billion LUNC. Coin burn can also be understood as a “tax” levied on everyone who owns LUNC for the common purpose of reducing the supply over time, thereby pulling up the value of the coin.
Despite this, there have been many critical arguments against the above LUNC and USTC proposals. The objections argue that:
- The “coin burning tax” does not create new uses or drive prices up.
- The “coin burning tax” affects the trading volume on the exchange, and the exchanges will not support it.
Binance Announcement September 16 The exchange will only apply a 1.2% coin burning tax for LUNC/USTC deposits and withdrawals on the exchange, not for normal trading transactions.
During yesterday’s AMA session on September 23, in response to this issue, CEO Changpeng Zhao (CZ) said that Binance is not currently considering imposing a 1.2% tax on LUNC and USTC transactions on the platform, because of this. does not create new uses and affect Binance’s trading volume.
The statement of the most influential person in the crypto world caused the LUNC price to witness a strong dump at around 06:30 PM on September 23.
However, before the mixed reaction from the Terra Classic community, the owner of the Binance exchange had to change his decision through blog posted late at night September 23. The content of the article is as follows:
“If Binance burns 1.2% of the value of each transaction, I don’t think the exchange will burn much because users will simply go to other platforms without burning. I could be wrong. But unless all the centralized exchanges around the world impose a burning tax, it won’t work.”
Accordingly, Mr. Zhao detailed the steps:
- Step 1: Binance will set up a custom that allows users to choose whether their LUNC transactions burn 1.2% of the value or not.
- Step 2: When the number of accounts that choose to burn coins reaches 25% of the entire amount of LUNC that Binance holds, the exchange will start levying a 1.2% coin burn tax on all users who have agreed to burn coins every time they trade LUNC.
- Step 3: When the number of accounts that choose to burn coins reaches 50% of the entire amount of LUNC that Binance holds, the exchange will impose a requirement to impose a 1.2% coin burn tax on all LUNC transactions.
CZ also added with case Step 2 not satisfied within 1 month of Binance implementation Step 1the exchange will turn off the custom feature of burning coins.
Like Binance, some other major exchanges such as OKX, KuCoin, Crypto.com, etc. have only applied a 1.2% coin burn tax for deposit/withdrawal transactions, only MEXC is applicable to them. all spot trades on the exchange.
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