– Terra Classic (LUNC) is planning to implement a new 1.2% transaction tax burn mechanism – The 1.2% tax is created to correct the error brought by the collapse of the Terra ecosystem – Some crypto exchanges might not support the tax burn – LUNC price surges, setting a 200% increase
Terra Classic's tax burn has caused a stir among crypto community members, causing discussions about what will happen to the original Terra network’s native token, Luna Classic (LUNC). Ever since the market crash in May, the community has been worried about the surplus of LUNC supplies. The 1.2% tax is being used to address this issue.
Days ago, community member Edward Kim presented a report in Terra Classic’s official forum that provided further details about how the Tax would work. Since the May market crash, people have been worried about the amount of Terra Classic that is available. The 1.2% tax should help with this issue.
All on-chain Terra Classic transactions will incur a 1.2% fee. This also includes wallet and smart contract interactions. However, trade on an exchange may not be eligible for the Tax. The idea behind the Tax is to assist reduce Terra Classic’s overabundance. Although the community is leaning more towards accepting a deflationary price, it’s still up in the air as to whether or not projects in development will find this challenging.
Kim’s proposal led many people to believe that this moment could be huge for Terra’s LUNC token and that the token’s value could potentially go up to $1 once the Tax is carried out. With this in mind, it plainly explains why the token has been doing so great recently within only a few weeks. For investors who have held LUNC for longer, those gains may be closer to 200%.
In response to the widespread negative sentiment that has been weighing on the market, ‘Terra Classic’ has reduced its weighted emotion indicator in favor of bulls. If the price of LUNC tokens rose to $1 each, the market capitalization for the network would be around $6 trillion. However, developers no longer use the network to power decentralized apps (dApps). It is also no longer supported by a serious developing team that can introduce upgrades and new features to grow the ecosystem.
Most of the LUNC trading happens on centralized exchanges such as Binance, Gate.io, and Huobi. If the community approves this proposal, some exchanges may opt to delist the token because they don’t support or agree with the 1.2% tax. Binance has announced that it will suspend all LUNC deposits and withdrawals made via the Ethereum network, BNB Smart Chain, and Polygon Network as of 7 September. This decision comes in light of the recent shutdown of the Terra Classic Shuttle bridge.