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 burn-in on LUNC transactions. The 1.2 percent burn of transactions is implemented by Binance (BNB) in two stages. While Wu shared his analysis on Twitter, Binance confirmed that it will burn 1.2% tokens from every transaction. The expert then relayed the announcement to his followers in a tweet:
Binance: Once participation accounts reach 25% of the total LUNC held on Binance, we will start charging 1.2% tax on all discretionary traders when they make LUNC trades. Once 50% is reached, we will apply the 1.2% burn for all LUNC operations.
Binance: When the opt-in accounts reach a holding of 25% of the total LUNC held on Binance, we start to charge 1.2% tax for all opt-in traders when they trade LUNC. When reach 50%, we will roll out the 1.2% trading tax for all LUNC trading. https://t.co/O1kzaKUzx2
— Wu Blockchain (@WuBlockchain) September 24, 2022
CZ’s proposed plan will be implemented
In his blog post, CZ presented a three-step plan for deciding whether to implement the burn. The first step of the plan is to implement a opt-in button for the 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 transaction. 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 wish to burn their tokens. CZ explained the necessity of this step with these words:
This prevents non-LUNC holders 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
LUNC Burn and Binance | Binance Blog https://t.co/z4cAjssGsO
— CZ 🔶 BNB (@cz_binance) September 23, 2022
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 transactions within Binance. CZ concluded that if the required 50% in step 2 is not reached within one month after completing step 1, the opt-in button will be removed entirely.
What is the LUNC ‘burn tax’? Why is it important for Terra Classic?
As you follow on Kriptokoin.com, the 1.2% tax on LUNC and USTC trading and transfers has 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 Terra tokens.
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