From 0 to 1.2%, Will LUNC’s Tax Burn Proposal Bring New Excitement?
The collapse of the Terra 1.0 ecosystem seems already an "old story" long ago. But in fact, the community has never stopped trying to start from scratch. And recently, a significant upgrade of LUNC network will be implied with the approval of a 1.2% tax burn proposal, which will bring a deflation mechanism to the LUNC.
This blog article will walk you through the breaking news about Terra Classic (LUNC) that you should know.
What is Terra Classic (LUNC)?
Terra Classic is the rebranded name for the old Terra blockchain, also known as Terra 1.0. Its native token, formerly known as LUNA, has now been rechristened LUNA Classic (LUNC). After the fork, Terra Classic is currently managed by the community.
Terra Classic is a decentralized, open-source, and public blockchain protocol that employs Proof of Stake consensus to support stablecoins that can enable convenient payments globally. LUNA Classic (LUNC) is the native token of the Terra Classic blockchain and is used to maintain the price stability of the stablecoins within the ecosystem.
What is 1.2% Tax Burn?
The Luna Classic carries over the existing Luna circulating supply of over 6 trillion, which has led to the community being concerned about the oversupply of LUNC. So the community voted to approve a 1.2% tax burn proposal and will be implemented on September 12th.
This proposal initiates the tax for all on-chain transactions, such as sending between wallets and smart contracts that interact with the chain. This parameter change cannot enforce taxes on off-chain activity (like trading on CEXs). However, depending on the mechanisms that these trading exchanges use, such as moving from hot to cold wallets, that activity can and will be taxed and burned. There are many implications to this tax, both technically and economically. Click for more details.
The Impact of The Tax Burn
There is no doubt that the Tax Burn will accelerate the process of deflation of LUNC. With the active on-chain transaction, more and more LUNC will be burned, which may provide strong support for the recovery of LUNC ecosystem. But One of the biggest drawbacks is that on-chain transactions will become more expensive as a result of this measure.
Other Implications of the tax burn of LUNC：
· Proof of community-driven governance realized on-chain
· Potential short-term catalyst in attracting new retail investors
· CEXs will not consider a burn off-chain until enacted on-chain
· Taxes are potentially detrimental to long-term economic activity and utility on-chain
· Existing dApps that do not account for taxes will be unsupported
With the approval of the 1.2% tax burn proposal, LUNC has recently become the hottest topic discussed by the crypto community. On September 7, KuCoin announced it would support the Terra Classic (LUNC) network upgrade. Meanwhile, KuCoin will launch the LUNC Upgrade Carnival to give away $1,000,000 to reward LUNC depositors and traders! Detail here.
The 1.2% tax burn proposal will be one of the most important upgrades to the LUNC network, which will bring a significant impact to its ecosystem. For some LUNC community members believe it is the potential to be the beginning of a recovery for the LUNC ecosystem.
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