Terra Classic On-Chain Volume Doubles Following 0.2% Burn

The 0.2% tax parameter change appears to have achieved the desired effect of increasing volumes, but there’s a catch.

On-Chain volume on the Terra Luna Classic (LUNC) network has surged following the 0.2% burn tax parameter change, as popular community influencer Classy Crypto highlighted in a Thursday tweet.

It is worth noting that this was one of the major goals of the proposal, which the community implemented to adjust the 1.2% burn tax to 0.2%. Notably, following the implementation of the 1.2% tax in September, on-chain volumes significantly declined.

Duncan Day, the proposal’s author, commenting on the development, noted that it was still too early to tell as, in his view, the community can only give a fair assessment after seven days.

“Gentle reminder that we need to measure this 7-days post-tax to give a reasonable assumption that it has increased volume on-chain,” Day wrote. “Given that I found 7-days enough to determine burn tax efficacy, it is only fair to give the same objective viewpoint here.”

While volumes have significantly increased, it bears mentioning that it has not had the desired effects on burns. Notably, the goal of reducing the tax to attract increased volumes was also to see a more effective burn, as Binance chief Changpeng Zhao, CZ, had asserted that lower tax leads to greater burns.

However, this is yet to be the case, as burns have declined despite the increased volume since the latest tax parameter change implementation. For example, before the change on October 18, the tax burned over 190 million LUNC, compared to 158 million LUNC burned on October 19, with about double the volume, representing a 17% decline.

The decline was even more significant on October 20, with only about 49 million LUNC burned by the tax, a further decline of about 69%. Notably, all of these are according to data from LUNC Burner.

Should this trend continue, it will be unsurprising to see another tax parameter adjustment by the community to achieve optimal results.

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