Terra Classic (LUNC) officially implemented a 1.2% burn tax on September 21, but Binance—the largest cryptocurrency exchange—declined to enforce it for spot and futures trading, sparking community backlash. Despite CEO Changpeng Zhao (CZ) stating that Binance's support would be ineffective without industry-wide adoption, the exchange ultimately responded to user demands by introducing an opt-in system for the tax.
Binance's Initial Resistance to LUNC Burn Tax
Since August, Terra Classic's price surged over 400%, drawing attention to its 1.2% transaction burn mechanism.
On September 21, the LUNC DAO announced the tax's live deployment, but most major centralized exchanges—including Binance—maintained fee-free trading. This decision triggered widespread protests, with users campaigning across social media to reverse the policy.
CZ's Perspective: "Support Alone Won't Work"
During a September 23 AMA, CZ emphasized that the burn tax would fail unless all exchanges collectively enforced it:
"Game theory dictates that users would simply migrate to tax-free platforms if Binance acted unilaterally. Universal adoption is mandatory for effectiveness."
Three-Phase User-Centric Implementation
On September 24, Binance outlined a gradual opt-in approach via an official blog post:
- Opt-In Button: Users can voluntarily enable 1.2% burn tax on LUNC trades.
- 25% Threshold: Once opted-in users represent 25% of Binance’s LUNC holders, the tax becomes mandatory for them.
- 50% Activation: If opted-in trades reach 50% of Binance’s total LUNC volume, the tax applies universally.
👉 How does Binance's LUNC burn tax compare to other exchanges?
CZ noted that the feature would be removed if the 25% threshold isn’t met within a month. By September 25, he reaffirmed that the decision ultimately rests with users, calling it "a centralized solution for decentralized choice."
FAQ: LUNC Burn Tax Explained
Q: Why did Binance initially reject the burn tax?
A: Binance argued that partial implementation would disadvantage its users while failing to reduce LUNC’s circulating supply.
Q: How does the opt-in system work?
A: Users toggle the tax via their account settings. Binance will only enforce it broadly if adoption meets predefined milestones.
Q: What happens if the 25% threshold isn’t achieved?
A: The opt-in feature will be discontinued to streamline the trading interface.
Q: Can the burn tax significantly impact LUNC’s price?
A: Yes—if widely adopted, reducing supply could create scarcity-driven price appreciation.
👉 Discover strategies for trading tax-affected assets like LUNC
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