As per the new 1.2% burn proposal, taxes will be charged and burned for on-chain activities, including transfers of LUNC between wallets and smart contracts.
The idea is to carry out a 1.2% token tax burn on all transactions to transform LUNC into a deflationary asset. However, KuCoin is still not supporting $LUNC burns, and its volume has dropped to 7% from 11% in the last month.
What is Terra Classic ($LUNC)
$LUNC is the native token of Terra Classic and is used for paying fees, staking and governance.
Terra Classic, rebranded from Terra, is a public blockchain based on Tendermint and is the mother to the algorithmic stablecoin, TerraClassicUSD (USTC) when $UST de-pegged from USD in May this year, the Terra Classic community decided to create a new blockchain without algorithmic stablecoins called Terra 2.0.
The new LUNA tokens were airdropped to old users affected by the depeg event.
What is ‘Burning’?
Fees are “burned” by sending LUNC to a Luna Classic “burn wallet.” This makes the funds inaccessible to users and reduces the coin’s supply in circulation. Binance, on September 26, introduced this mechanism to improve the trading experience after the LUNC community proposed the idea.
Bitcoin announced that the LUNC burns would not affect LUNC sport and margin trading fees. The exchange caps trading fee rates at 0.1%. The burn began on September 21, and according to Binance, nearly 5.6 billion LUNC tokens (approximately $1.8 million) were sent to a burn address.
Most LUNC Traders Rejected LUNC Burning
$LUNC burn, an unofficial Twitter account tracking LUNC burn activity, gained a considerable following shortly. The community described the proposal as crazy and “out of touch.”
According to them, the proposal is a step backward, considering burn initiatives that have already been implemented.
Another $LUNC community member claimed the news was dishonest and a PR stunt to get viral engagement.
KuCoin had said that its services related to LUNC would remain unaffected if the community rejected the proposal.
“KuCoin will support the 1.2% tax burn when the proposal is officially approved and implemented on Terra Classic (LUNC) mainnet. Services on KuCoin will remain unchanged if the community does not approve the proposal,” they wrote on their website.
$LUNC Burning Fails
Binance originally wanted to burn up to $1.8 million worth of LUNC tokens. At this time, trading volume and speculative attention around LUNC had spiked.
Shortly after the announcement, Luna Classic’s market capitalization increased by about $1 billion. This meant that the $2 million tokens that were burned were insignificant.
$LUNC Founder Wanted
While others boo the $LUNC coin, hoping it will fall to zero, co-founder Kwon is a wanted man.
Kwon is on Interpol’s red notice list after falling afoul of South Korean capital market laws. He is currently facing class-action lawsuits in both South Korea and the US.