The Terra Classic community (formerly LUNA, now rebranded as LUNC) recently witnessed volatile price movements following the implementation of a 1.2% transaction burn tax. While initial enthusiasm drove prices upward, subsequent token burns fell short of expectations, leading to a sustained downward trend.
Key Changes to LUNC and USTC Burn Tax Policies
On October 19, the Terra Classic community passed Proposal #5234, significantly reducing the on-chain burn tax for both LUNC and USTC:
- Previous rate: 1.2% per transaction
- New rate: 0.2% per transaction
- Allocation: 10% of the remaining burn tax will fund ecosystem infrastructure and developer incentives
The adjustment aims to:
- Encourage off-chain holders to resume on-chain activity.
- Maintain deflationary mechanisms while reducing user friction.
- Enhance network utility through sustainable funding.
👉 How does burn tax affect crypto economics?
Implementation Timeline:
- Effective as of October 19, 20:50 UTC.
- Major exchanges like Binance have updated their fee structures accordingly.
Binance’s Updated Fee Structure
Binance announced compliance with the new burn tax rate:
| Transaction Type | Fee Adjustment |
|------------------|----------------|
| Deposits | Reduced from 1.2% to 0.2% for LUNC/USTC. Third-party withdrawal fees (if applicable) still apply. |
| Withdrawals | 0.2% burn tax deducted + standard withdrawal fee. |
Market Performance Post-Proposal
Despite policy optimizations, LUNC and USTC prices continued declining:
LUNC:
- Peak (Sept.): $0.0006
- Current: $0.00024752 (-60% from ATH, -7.3% in 24h)
USTC:
- Peak: $0.059
- Current: $0.0347 (-55% from ATH, -8.3% in 24h)
FAQs
Q: Why reduce the burn tax?
A: Lowering the rate mitigates user attrition while preserving deflationary benefits, fostering long-term adoption.
Q: Will this stabilize LUNC’s price?
A: Market reactions remain speculative. The adjustment may improve transaction volume but doesn’t guarantee price recovery.
Q: How does Binance handle the tax change?
A: Binance automatically adjusts deposit/withdrawal fees to 0.2%, streamlining user compliance.
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Conclusion
The Terra Classic community’s proactive governance demonstrates adaptability, though market sentiment remains cautious. Stakeholders should monitor on-chain activity and exchange integrations for future momentum shifts.