The biggest crypto exchange by trading volume, Binance, has revealed a technique to burn all trading commissions on Terra Classic (LUNC) spot and margin pairs.
The Terra community joined forces in May to look for alternative methods for keeping the blockchain after the Terra Protocol failed. Lately, a motion to resurrect Terra Classic (LUNC) was supported by its members. It will apply a 1.2% tax burn across all on-chain transactions.
Nevertheless, because the community is not able to enforce their plan on them, it was unclear how this tax burn could be implemented on any centralized exchange where Terra Classic (LUNC) is exchanged.
The largest centralized exchange has now made the decision to join its rivals in this attempt – with certain important variations – following MEXC’s implementation of a time-limited burning activity for spot trading costs for LUNC/USDT and LUNC/USDC.
In response to the Terra Classic (LUNC) community suggestion, Binance will transfer all trading fees for spot and margin trading pairs on the Terra Classic (LUNC) to the burn address specified by members of the ecosystem. Weekly disclosures of the amount of Terra Classic (LUNC) burnt and its equivalent amount in $USDT, along with an on-chain transaction ID, will be made.
The first round of Terra Classic (LUNC) trading fees that will be burned will include trades executed prior to the implementation of this burn mechanism and will be computed from September 21 through October 1.
The $BNB fee reductions, refunds, or any other type of modification or discount will not be impacted by the burn process, according to Binance’s statement to its users. The Binance Spot Liquidity Provider Program will be the lone outlier; starting on September 27th, fee reductions with Terra Classic (LUNC) spot and margin pairings will be suspended.
Changpeng Zhao, the CEO of Binance highlighted the potential implementation of an opt-in option for clients to pay a 1.2% tax for Terra (LUNA) trading after the tax burn user motion was accepted.
A 1.2% fee would be applied to all opt-in traders’ trades of Terra Classic (LUNC) once the opt-in accounts contain 25% of the total amount of Terra Classic (LUNC) owned on Binance.
Once opt-in traders represent 50% of Binance’s total Terra Classic (LUNC) trading volume, the 1.2% trading charge will be applied to all Terra Classic (LUNC) trading. Presumably, this would deter whales or those who hold a lot of the cryptocurrency but do not regularly trade it, from making a vote influence.
CZ explained on Twitter that they had to try a different strategy because this one would not really work.
» Binance To Implement Terra Classic (LUNC) Burn Mechanism
Quick thread on what we’re doing and why below.https://t.co/b86RlCGPmv
— CZ 🔶 Binance (@cz_binance) September 26, 2022
Binance proposed another strategy because the Terra community was still not pleased with the original mechanism, which would take some time to construct and was dependent on trader votes, which was improbable to occur.
The CEO claims that the Terra Classic (LUNC) burn will be covered by Binance, not the users, with the burn mechanism that will be put in place. “We can be fair to all users. The trading experience and liquidity remain the same, and Binance can still contribute to the supply decrease of LUNC, which is what the community wants,” said CZ.