After reaching almost rock bottom the LUNC is trying to gain back some of its value at least. With the LUNC drop which slowly turned into the whole crypto market dropping down has thought of a new strategy to gain the value back. According to the new proposal submitted by the LUNC team for the initiation of tax on an on-chain transaction which was described in the earlier proposal 3562 which was for 1.2% burn and protocol 4159 which was for the distribution of v22.
What is written in the proposal?
The proposal includes all the detailed information related to what’s going to happen and what are the possible advantages and disadvantages of this decision.
This 1.2% tax will only be applicable on the on-chain which means the wallet and smart contract interactions, decentralized exchanges, dApps, etc. This 1.2 tax won’t be applicable on off-chain which includes trading and transactions on centralized exchanges.
And that 1.2% of the transaction will be burned to limit the LUNC’s supply and to increase the demand for the LUNC cryptocurrency. Initially, the tax applied on the Terra Classic was 0 and now it will be 1.2% and it will be applicable on all the denominations which are available on the chain which also includes LUNA, and UST.
The tax will be applicable in the following situations only
- If as a user you are sending crypto from a blockchain to a centralized exchange like Suncrypto and vice versa then a 1.2% tax will be applicable, but it won’t go to the exchange, it will be burned.
Blockchain to exchange – Taxed
Exchange to blockchain – Taxed - From a hot wallet to a cold wallet – Taxed
- Frome One exchange to another – Taxed
According to the protocol following are the Pros and cons of this 1.2% tax burning
Pros
- Proof of community-driven governance realized on-chain
- push for deflation on UST and LUNC
- Potentially attracting new retail investors over the short run.
- Before it is implemented on-chain, CEXs will not consider a burn-off-chain.
Cons
- Taxes may have a negative impact on long-term economic growth and the utility chain.
- Existing dApps that don’t take taxes into account won’t be supported.
- There is no assurance that CEXs will burn off the chain.
- Tax may drive remaining liquidity to CEXs without taxes, off-chain.
- A potential barrier to luring fresh venture capital or fund investors
What impact is it causing?
After the release of this proposal, the prices of Terra Classic are seeing continuous hikes because of the continuous support of the holders of this cryptocurrency. Even it is getting trendy on Twitter and especially in the comments “Let’s bring Terra Classic Up to $1”. At the moment of writing the price of Terra Classic is ₹0.01928, and it reached its current highest on 1 September which was ₹0.02689.
Even the people who haven’t invested in Terra Classic started showing interest because of this burning decision and the continuous support shown by the LUNC community.
History of LUNC (Terra Classic)
LUNC was earlier known as LUNA which end up hitting the rock button in May 2022. It was created in January 2018 by Do Kwon and Daniel Shin with a vision of creating a cryptocurrency that is price stable and will cause the mass adoption of the cryptocurrency. But it failed in that and lost all the value leading to multiple legal cases against the founder.
Later on, in June, they released LUNA version 2.0 which we know by the name Terra (LUNA). But that also didn’t go as planned as after a while the prices also went down. This 1.2% burn is another way to get the LUNC back on track and gain all the value it has before the May incident.
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