After getting the necessary votes, a major proposal has just passed the KuCoin network. The proposal aimed to increase the Terra Classic LUNC burns tax to 0.5%.
Following the positive results, KuCoin declared an increase in the LUNC network burn rate from 0.2% to the proposed 0.5%.
The LUNC Network Burns Tax Spikes In KuCoin
KuCoin takes the Twitter to announce an increase in the burn tax. In its announcement, KuCoin stated that it will facilitate the increase of Terra Classic LUNC and TerraClassicUSD (USTC) on its platform after the activation of the burning tax.
Notably, the activation will take place on the designated Terrra Classic block length of 12,902,399 and will take effect on May 23.
Once activated, KuCoin will pay users more for transactions involving two crypto assets, LUNC and USTC. Besides the additional fees, the burn rate tax will reduce the supply of LUNC.
But there is still a drawback of increasing the burn rate tax because it will reduce the amount of trade. This is why many exchanges have rejected such proposals in the past.
Notably, KuCoin has always supported such increases even when other exchanges have delayed. For example, exchange is supported first a September 2022 Terra Classic burn tax of 1.2% even before the proposal was passed.
Other exchanges, including Crypto.com, MEXC, and Binance, later declared support for the burning tax.
But after the proposal was passed, data explained that increase reduces the trading volume for LUNC. Many investors have stopped trading the asset due to rising fees.
After the result, the LUNC community voted to reduce the burn tax to 0.2%, attract support on crypto exchanges like Binance.
After the reduction, the Terra Classic community brought another proposal to increase the burn tax rate, but it was not implemented.
Latest Fire Tax Increase Proposal, 3 With Huge Support
While other proposals to increase the burn tax after its reduction from 1.2% to 0.2% failed due to many debates and arguments, the latest one received a lot of support.
One of the reasons proposal 11515 was passed was the conservative increase, which would not increase fees and discourage investors.
The proposal primarily focuses on reducing the oversupply of LUNC tokens in the market to avoid oversaturation and its associated risks.
However, this is not the only proposal submitted by the LUNC community. An active member raised 3 more proposals, plus an increase in the burning tax to promote network economic policies.
The other three are aimed at increasing demand by increasing staking rewards, whitelisting smart contracts to improve chain utility and volume, and increasing community pool funding to strengthen developer funding.
-Featured image from Pexels, chart from Tradingview