While this development will help in reducing the hyperinflated supply of Terra Classic (LUNC), this will further increase the fees users would pay when they buy and/or sell LUNC and USTC on the Seychelles-based crypto exchange.
Submitted for voting on March 19 by a top Terra Classic community member Dfunk, Proposal 11515 has recently passed governance voting. The proposal dubbed “New Economic Policy for Terra Classic” is a set of four propositions to align incentives.
Dfunk proposed to have the LUNC burn tax on all on-chain transactions on the Terra Classic network increased from the initial 0.2% to 0.5%. According to him, this will help in reducing the total supply of the LUNC as more tokens will be burned. He wrote, “As we focus on increasing LUNC demand via staking, we also need to focus on reducing LUNC supply via burn tax. As a result, I propose to increase the burn tax to 0.5%.”
The Terra Classic community which previously kicked against an increase in burn tax to 1.2% shortly after implementation, as it caused a reduction in trading volume voted in support of the new proposal. Henceforth, users will be levied a tax worth 0.5% of transaction volume when they execute a trade or other transactions involving LUNC and USTC via the Terra Classic network.
Kucoin, a top cryptocurrency exchange, is among the first exchanges to announce support for the latest development in the Terra Classic community. The exchange disclosed this in a Thursday press release, stating that it will implement the new LUNC burn tax rate when the 0.5% tax burn goes live. Notably, the burn tax increase on the Terra Classic network is expected to occur at a block height of 12,902,399.
#KuCoin Will Support to Increase the Tax Burn of Terra Classic (LUNC) Network from 0.2% to 0.5%
— KuCoin (@kucoincom) May 18, 2023
Part of the announcement read, “Terra Classic (LUNC) community has passed Proposal 11515, which will increase the tax burn of the Terra Classic (LUNC) network to 0.5%. Therefore, KuCoin will support to increase the tax burn Terra Classic (LUNC) and Terra Classic USD (USTC) tokens when the 0.5% tax burn goes live at the Terra Classic block height of 12,902,399.”
While Binance and other exchanges are yet to show support for the burn tax increase, Binance CEO Changpeng Zhao believes a high burn tax rate would affect the LUNC burn expedition negatively as it could discourage whales from trading. Notably, the largest crypto exchange is the top contributor to the LUNC burn mission with over 31 billion LUNC burned so far.
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