Changpeng Zhao (CZ), the CEO of Binance, the largest crypto exchange by trading volume, has proposed three steps that the trading platform would follow, which would bring about the effective burning of Terra Classic (LUNC).
In a recent blog post released after the AMA session on the 23rd of September, CEO Zhao said on his Twitter space, he was asked if Binance is ready to support the LUNC burn of 1.2% for every trade on Binance.
He said, “I spoke for a few minutes about it, but I want to take some time to answer this more in-depth, and actions we will take.”
In the blog post, he stated further that “A while back, I was asked about the LUNC burn on Twitter, and I responded that the project needs to implement it on chain first. This comment was a bit open to interpretation, and many people thought this meant that if it happens on-chain, Binance will implement all LUNC burning off-chain too.
“This is a wrong interpretation. I didn’t make any promises. My comment was simply that, as a business, we wouldn’t even consider implementing something that isn’t done on the protocol level first. Now, let’s consider it.”
Three Steps for an Effective Burning of LUNC Tokens
In his explanation, CZ said he knows that it’s the desire of the Terra Classic community to see all platforms and chains burn 1.2% of LUNC at every transaction.
He said people want to see supply decrease but things change when it directly impacts their balance. He stated that things may not work as planned if all centralized exchanges are not made to comply with the burn proposal.
CZ noted, “If Binance charged 1.2% per transaction, I don’t think we would burn very much because most LUNC traders would go to other exchanges that don’t have the burn. I could be wrong.”
So, in order to not impact the trading platform’s user experience, Zhao listed and explained three steps he thinks would be more effective.
For step 1, he said Binance will implement an opt-in button for people to personally approve their readiness to pay a 1.2% tax for their LUNC trading.
For step 2, CZ stated that when the opt-in accounts reach a holding of 25% of the total Terra Classic (LUNC) held on Binance, the 1.2% tax will be made effective for all opt-in traders when they trade LUNC.
According to Binance CEO, this step will prevent people who don’t hold LUNC from affecting the votes. It will also give the early adopters peace of mind that they are not the only few paying an extra 1.2%.
Regarding step 3, CZ said when the opt-in traders reach 50% of the total LUNC trading volume on Binance, the 1.2% trading tax for all LUNC trading will be rolled out. He said this step will prevent LUNC whales from influencing votes, especially whales that are not active traders.
In conclusion, Binance CEO said, “If the threshold for Step 2 cannot be reached within a month of the completion of Step 1, or falls back below the threshold in the future, we will remove the opt-in feature to keep to a simpler user experience.
“We believe this is the most scientific way to “vote” by our traders. We listen to and protect our users.”