The largest centralized cryptocurrency exchange announced its highly anticipated Terra Classic (LUNC) burning profit.
The news that Terra Classic investors have been waiting for has arrived.
Colin Wu, a Chinese crypto expert and journalist, said that Binance is approaching the implementation of burn in LUNC processes. The 1.2 percent burn application from the processes is implemented by Binance (BNB) in two steps. While Wu shared his insights on Twitter, Binance confirmed that it will burn 1.2% tokens from each transaction. The expert then relayed the announcement to his followers in a tweet:
Binance: When affiliate accounts reach 25% of the total LUNC held on Binance, we start charging 1.2% tax on all discretionary traders when they make LUNC processes. Once 50% is reached, we will apply the 1.2% burn for all LUNC processes.
CZ’s proposed plan will be implemented
In his blog post, CZ presented a three-phase plan for deciding whether to implement the burn. Step one of the plan is to implement an affiliate button for LUNC tax burning. This is visible to LUNC owners and they can open it if they want to burn 1.2% of their LUNC in each process. If the number of users choosing to apply the tax burn exceeds 25% of the total LUNC held on Binance, the exchange will take the second step and charge a 1.2% tax burn for all users who choose to participate. This burn will only be available to those who want to burn their tokens. CZ explained the necessity of this step with these words:
This prevents individuals without LUNC from influencing votes. It also gives early adopters peace of mind that they are not the only few paying an extra 1.2%. The tax only comes into play with a 25% quorum. This should encourage them to participate more easily
Finally, if the number of registered users exceeds 50% of the total LUNC held on Binance, the third step of the plan will be initiated to apply gas on all LUNC processes within Binance. CZ concluded that if the required 50% in step 2 is not reached within one month of completing step 1, the affiliate button will be removed altogether.
What is the LUNC ‘burn tax’? Why is it valuable to Terra Classic?
Koindeks.com As you follow, the 1.2% tax on LUNC and USTC trading and transfers sparked interest in the Terra-backed stablecoin. A “burn tax” was introduced to make LUNC deflationary and reduce risks. This increases the predictability of Terra Classic’s tokenomics (LUNC). After the collapse of Terra (LUNA), two new tokens, Terra Classic (LUNC) and TerraClassicUSD (USTC), were launched. Despite the initial interest, investors are still apprehensive about their Terra tokens.