After garnering the required votes, a major proposal has just passed in the KuCoin network. The proposal aimed at raising Terra Classic LUNC burns tax to 0.5%.
Following the positive results, KuCoin declared increasing the LUNC network burn rate from 0.2% to the proposed 0.5%.
LUNC Network Burn Tax Spikes On KuCoin
KuCoin took to Twitter to announce the increase in the burn tax. In its announcement, KuCoin stated that it would facilitate the Terra Classic LUNC and TerraClassicUSD (USTC) increase on its platform following the burn tax activation.
Notably, the activation will occur at the designated Terrra Classic block height of 12,902,399 and take effect on May 23.
Once activated, KuCoin will pay users more for transactions involving the two crypto assets, LUNC and USTC. Apart from the increased payments, the burn rate tax will reduce LUNC supply.
But there’s still a downside to the increased burn rate tax as it will reduce the trading volume. This is why many exchanges rejected such proposals in the past.
Notably, KuCoin has always supported such increases even when other exchanges delay. For instance, the exchange first supported a September 2022 Terra Classic burn tax of 1.2% even before the proposal passed.
Other exchanges, including Crypto.com, MEXC, and Binance, only later declared support for the burn tax.
But after the proposal passed, data implied that the increase reduced the trading volume for LUNC. Many investors stopped trading with the asset due to the spike in fees.
Following the outcome, the LUNC community voted to reduce the burn tax to 0.2%, attracting the support of crypto exchanges such as Binance.
After the reduction, the Terra Classic community brought up another proposal to increase the burn tax rate, but it wasn’t implemented.
Latest Burn Tax Increase Proposal, 3 Others Gain Massive Support
While other proposals to increase the burn tax after reducing it from 1.2% to 0.2% failed due to several debates and arguments, the latest one received massive support.
One of the reasons proposal 11515 passed was the conservative increase, which wouldn’t spike fees and discourage investors.
The proposal focused mainly on reducing the excess supply of LUNC tokens in the market to prevent oversaturation and its associated risks.
But, it is not the only proposal submitted to the LUNC community. An active member raised 3 other proposals, plus the burn tax increase to enhance economic policies on the network.
The three others aimed at augmenting demand by increasing staking rewards, whitelisting smart contracts to enhance chain utility and volume, and increasing community pool funding to bolster developer funding.
-Featured image from Pexels, chart from Tradingview