After a drastic drop in the volume of transactions on its blockchain, the Terra Classic community (LUC) passed a proposal aimed at lowering the burn-on-chain rate by around 1%. A decision partly encouraged by Changpeng Zhao, the CEO of Binance, which largely contributes to the burn of LUNC tokens.
Terra Classic (LUC) lowers its burn rate
Following a governance vote initiated on October 10, the burn tax for the LUNC, which until now remained at 1.2%, increased to 0.2% on on-chain transactions.
According to the issuer of the proposal, the volume of on-chain transactions on the Terra Classic blockchain decreased by around 91.67% following the implementation of the initial burn on September 21 under proposition 4159. This tax had been put in place in order to bring down the number of LUNC tokens in circulation, their volume having completely diluted the intrinsic value of the asset following the collapse of Terra last May.
Also, although the initial measure is encouraging, it seems that it was enough to discourage the majority of investors. The proposal thus issued on October 10 aims to convince them to use the network while participating in the burn of LUNC more painlessly.
The proposal was accepted with 75% of the votes in favor. According to the author of the proposal and member of the LUNC community, 82% of the members contributed their vote and he also notes that the exchange KuCoin also participated in the vote.
Proposal 5234 just passed! 🥳❤️🔥🦾
This was a community proposal brought forward by community members which passed governance!✅ @kucoincom voted for the first time
✅ Had an 82% vote rateWe are decentralized, I encourage everyone to start discussions and take action!❤️🔥
—Akujiro (@Akujiro2) October 17, 2022
It should also be noted that in parallel with the on-chain tax reduction, the proposal also aims to use 10% of the taxes collected to pay contributors and finance the various activities of the ecosystem.
Edward Kimthe co-author of the proposal we are talking about here, explained in more detail on his Medium blog how this reduction could benefit the blockchain in the long term.
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A decision encouraged by Changpeng Zhao
Binance had struggled to decide whether or not to implement the 1.2% tax on LUNC transactions taking place on its platform. However, following the request of the community, the exchange agreed to carry out the burn, which then had the direct effect of increase the price of the token by around 60%.
In a recent Q&A session, Changpeng Zhao, CEO of Binancehas also asked the Terra Classic community to revise its burn rate, especially since the exchange had, on its own, already contributed to the burning of more than 11 billion LUNC tokens.
According to Akujiro, this request from CZ would have further motivated this proposal, as he states on Twitter:
@kucoincom @binance @cz_binance the proposal 5234 passed and will go live soon!
We listened to CZs AMA and took his advice to heart!
The community followed and now we need an answer:Will you burn? 🔥#kucoinburnlunc pic.twitter.com/p64USxaGcl
—Akujiro (@Akujiro2) October 17, 2022
The exchange issued a statement dated October 19 confirming that it would now burn 0.2% by directly debiting the deposits and withdrawals of its users, in accordance with the decision of the Terra Classic community.
The price of the LUNC does not seem to have been influenced by the news at the time of writing, with a very slight drop of 0.1% over the last 24 hours.
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Sources: Proposal, Binance
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