The Terra Classic (LUNC) community has been waiting for support from centralized exchanges for token burns for a while. Today, confirmation from KuCoin. The exchange has tripled the rate it receives from transaction fees for altcoin burns.
KuCoin broke the good news for altcoin investors
Binance began using some of its revenue from LUNC transaction fees to mitigate the LUNC breakdown, to support investors who suffered huge losses after Terra’s bankruptcy in 2022. The burning fee, which was initially set at 100%, was later reduced to 50% with an official announcement.
OKX, one of the exchanges supporting the token burn event, shared that it has increased its burn rate in a new announcement today. The exchange announced that it has increased the LUNC network burn rate from 0.2% to the recommended 0.5%. He stated that after its activation, it will facilitate the increase of Terra Classic LUNC and TerraClassicUSD (USTC) on its platform.
#KuCoin Will Support to Increase the Tax Burn of Terra Classic (LUNC) Network from 0.2% to 0.5%
— KuCoin (@kucoincom) May 18, 2023
The new LUNC burn rate takes effect on this date
According to the official announcement, the activation will take place at the Terra Classic block height, which is determined as 12,902,399. This coincides with the early hours of May 23 as timing.
Once activated, KuCoin will pay users more for transactions involving two cryptos, LUNC and USTC. Apart from the increased payments, the LUNC will reduce its supply with the burn rate tax. However, the increased burn rate tax still has a downside, as it will reduce transaction volume. For this reason, many exchanges have rejected such offers in the past.
Notably, KuCoin has always supported such increases, even when other exchanges lagged. For example, Terra Classic imposed a 1.2% incineration tax in September 2022 even before the proposal passed.
Other exchanges, including Crypto.com, MEXC, and Binance, only later announced they were supporting the burn tax. However, after the proposal was accepted, the data showed that the increase reduced the trading volume for LUNC. Many investors have stopped trading the asset due to the rise in fees.
Altcoin investors complain of rising transaction fees
The increased token burn rate is directly reflected in users’ LUNC and USTC transaction fees. As a result of the rising prices, the LUNC community voted to reduce the incineration tax to 0.2%. Major crypto exchanges like Binance also supported this decision.
After the discount, the Terra Classic community made another proposal to increase the incineration tax rate, but this was not implemented.
Despite the $LUNC poll approval on the latest proposal 10960 I've been told by devs, prominent validators & Classy's Crypto Sphere delegates that we should NOT proceed with a burn tax increase.
This can destroy our efforts at an off-chain burn partnership & DAPPs from V23. pic.twitter.com/7LlRPljcAU
— Jesus Martinez (@0xJesusMartinez) November 27, 2022
The community is now loud again
Other proposals to increase the incineration tax after lowering it from 1.2% to 0.2% failed due to various controversies, while the last one received strong support. One of the reasons that proposal 11515 passed was the conservative increase, which did not increase fees and did not deter investors.
The proposal mainly focused on reducing the oversupply of LUNC tokens in the market to avoid oversaturation and the associated risks. However, this is not the only offering to the LUNC community. An active member brought 3 more proposals to improve economic policies in the network, as well as an increase in the burning tax.
The other three aimed to boost demand by increasing staking rewards, whitelisting smart contracts to increase blockchain utility and volume, and increasing community pool funding to support developer funding. Meanwhile, the South Korea case, which we referred to as Kriptokoin.com, was on the agenda of the community.
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