Binance exchange has pledged to help the Terra Classic community by burning trading fees in the LUNC token. However, a proposal, called Proposition 10,983, could see the exchange end this policy. Under the new proposal, the aim is to increase the community pool from 10% to 50% and reduce the burn tax to 0.2%. Part of the community supports the approval of the proposal as a way to increase funding for projects in Terra Classic. On the other hand, most believe that the proposal will cause Binance to revoke its LUNC burn mechanism. And this revocation could have several negative impacts on the already battered token.
Proposal 10,983 May end burnings
The Terra Classic community is currently voting on Proposal 10,983, titled “Parameter Change: Increase rate_min reward policy to 0.5“. The proposal aims to finance the community pool with 50% of the 0.2% burn tax instead of the current 10%. According to developers and some validators, who are in favor of the proposal, this measure will help finance large capital-intensive projects through proposed community spending. With this, both the Terra Classic blockchain and the LUNC will once again be useful in the market. Tobias Andersen, core developer of Terra Classic and member of Terra Rebels, says the supply of LUNC, which now stands at around 6 trillion tokens. In this sense, the fastest way to reduce LUNC supply is by encouraging activity on the blockchain, reactivating swaps and implementing lower burn rates. Developers believe that dApps, whales and other projects will burn more LUNC tokens. However, lowering the burn tax did not increase the LUNC trading volume as previously expected. The Terra Classic community actually passed Proposition 5234, which reduced the burn tax from 1.2% to 0.2% and funded the community pool with 10% of LUNC burns. Under the new proposal, pool funding would increase by five times.
risk of abandonment
On the other hand, the community believes that Proposition 10,983 will cause Binance CEO “CZ” to revoke the LUNC burn mechanism. Binance is burning its trading fees on spot LUNC and margin trading pairs as a way to make a contribution to the community. This means that there is no formal commitment and Binance can cancel the mechanism at any time. Since its implementation, the exchange has burned over 20 billion LUNC in just two months. To give you an idea, the community, other exchanges and projects together burned 15 billion LUNC tokens. That is, Binance’s action has a primary effect on reducing LUNC in circulation in the economy. Without the exchange, the community’s plans could go down the drain. A member of the Terra Rebels group announced that the group is in discussions with Binance regarding Proposition 10,983.
LUNC Price Rises After Binance Burn
Terra Classic price jumped 17% after Binance burned 6.39 billion LUNC tokens in November. According to blockchain data, the exchange sent the tokens to the recording address on Thursday (1). When this happens, the LUNCs sent are lost forever, which positively impacts the token price. As per data from CoinGecko, the price of LUNC is at $0.0001812, up nearly 10% in the last 24 hours. Trading volume has increased by almost 300% in the last 24 hours.
