The announcement of LUNC staking and a LUNC Tax Burn Proposal 3568 made the price of LUNC pump. According to data from Coingecko Terra Classic (LUNC), the price increased by over 370% in 14 days. The rally pushed the price from an ATL of $0.0001 to over $0.00043 with a 24-hour trading volume that jumped over $2.7 billion, were $1 billion comes from the Binance exchange alone.
This surge is likely a result of the Luna classic community burning over 3.5 billion LUNC tokens and staking over 528 billion LUNC tokens. However, the entire LUNC community is still bullish as there’s an ongoing 1.2% burn tax proposal to be released on September 12 2022 that will drastically increase the inflation of the token.
LUNC Tax Burn Proposal 3568 Explained
In June, the first detailed plan to implement this transaction tax was put forward. However, it did not elaborate on how this would work or on the coding that would need to be inserted into the network’s backbone in order for it to function.
There has been a lot of speculation regarding Terra Luna and where it came from and what happened to it. The cryptocurrency community wondered if the original goal was accomplished. This question leads me to ask: What exactly is this LUNC Tax burn?
In any case, the 1.2% tax may be news to many LUNC traders and would-be traders, so here’s a quick rundown. The 1.2% fee will be applied to all Terra Classic transactions processed on the main network. This entails not only dealing with a wallet, but also a smart contract. However, transactions conducted on an exchange might not be subject to the Tax.
The goal of the Tax is to help deal with the surplus of Terra Classic. One major drawback is that this solution will increase the cost of on-chain transactions.
Although there has been a shift toward accepting a deflationary price by the community at large, it is unclear whether or not this will pose difficulties for ongoing projects.
The 1.2% Tax Burn May no be Supported by Crypto Exchanges
According to information provided by CMC, the vast majority of LUNC trading takes place on regulated markets like Binance, Gate.io, and Huobi. For this reason, some exchanges may decide to delist the token if the community votes in favor of this proposal.
Binance has stated that as of September 7th, all LUNC deposits and withdrawals will be halted for the Ethereum network, BNB Smart Chain, and Polygon Network. Due to the recent closure of the Terra Classic Shuttle bridge, this decision has been made.
Binance is the most used CEX for trading LUNC at the moment, with over $300 million changing hands in the last 24 hours. Transaction volumes may decrease in relation to LUNC trading if Binance stops supporting trading on these networks before the shutdown of the Shuttle bridge. Potentially lower trading volume due to higher transaction fees.