KuCoin to Increase LUNC Burn Tax to 0.5% as Major Proposal Passes

KuCoin declared support for the burn tax increase after the passing of a Terra Classic (LUNC) proposal seeking to raise it from 0.2% to 0.5%.

KuCoin, a prominent Seychelles-based crypto exchange, has declared support for the increase of the Terra Classic (LUNC) network’s burn tax from 0.2% to 0.5%. This decision was made in response to the passing of a proposal seeking the implementation of the increase.

The recent disclosure was made in an official press release and subsequently shared on Twitter. 

#KuCoin Will Support to Increase the Tax Burn of Terra Classic (LUNC) Network from 0.2% to 0.5%

— KuCoin (@kucoincom) May 18, 2023

In the announcement, KuCoin expressed its commitment to facilitating the increase for both Terra Classic (LUNC) and TerraClassicUSD (USTC) on its platform once the 0.5% burn tax is activated at the designated Terra Classic block height of 12,902,399. The change is expected to come into effect on May 23.

Essentially, this will result in KuCoin users paying more for their Terra Classic and TerraClassicUSD transactions on the exchange but will also help in reducing the LUNC supply. Recall that the community and several exchanges had previously rejected past proposals for a burn tax increase due to the negative effects it has on trade volume. 

As previously reported by The Crypto Basic, the Terra Classic community voted to pass a proposal to increase the burn tax to 1.2% in September 2022. KuCoin was one of the first exchanges to declare support for the increase even before it officially passed. Other exchanges, such as Binance, MEXC and Crypto.com, followed shortly after.

However, on-chain data indicated that the burn tax increase affected LUNC trading volume, as it discouraged investors from trading the asset due to the heightened fees. As a result, the community voted to decrease the burn tax back to 0.2% in October 2022. Subsequent proposals to once again increase the tax have failed so far, until now.

The Latest LUNC Proposal Receives Support

Proposal 11515, the latest proposal, introduces a more conservative increase to 0.5% and has garnered support from the community. Like previous proposals, the primary objective remains to reduce the abundant supply of LUNC tokens.

Notably, the proposal is one of four recent proposals submitted by dfunk, an active LUNC community member. All four proposals seek to implement enhanced economic policies, and have all been passed by the Terra Classic community.

The three other proposals look to augment demand through improved staking rewards, bolster developer funding by increasing community pool funding, and enhance chain utility and volume by whitelisting smart contracts. All these aim to support the revitalization plan of the Terra Classic ecosystem.