There has been a lot of chatter lately about what could happen to the native token of the original Terra network – Luna Classic (LUNC).
A growing community of people who want to get rich quickly by prompting a rally in the crypto asset has been proposing for months a massive token burn that could reduce LUNC’s available supply to push the price higher.
Their proposal appears to have gained momentum as the price has been steadily climbing from $0.0002387 to $0.0002878 since the month started resulting in a 21% monthly gain. However, for those who had been holding LUNC for longer, those gains may be closer to 200%.
These gains are the result of growing expectations that a proposal made by several members of the community to impose a 1.2% transaction tax for LUNC may pass and could result in a reduction in the token’s supply.
How Does the 1.2% Tax Proposed by LUNC’s Supporters Work?
The first formal proposal concerning this transaction tax was brought up in June this year. However, it did not explain how exactly this would work or the coding that will have to be incorporated into the network’s backbone to be appropriately implemented.
However, a more comprehensive proposal appears to have been presented by community member Edward Kim four days ago in Terra Classic’s official forum that provided further details about how the tax would work.
According to Kim’s post, the tax will be imposed on all on-chain transactions, meaning that it would be nearly impossible to enforce it for transactions occurring within centralized exchanges as they typically use off-chain mechanisms to settle trades.
The seriousness of Kim’s proposal has made many think this could be a key moment for Terra’s LUNC token, with the token’s value possibly rising to $1 after the tax is put in place. This helps explain why the token has surged so much in recent weeks.
Can Luna Classic (LUNC) Rise to $1?
Data from CoinMarketCap indicates that the circulating supply of Luna Classic (LUNC) is currently standing at 6.15 trillion tokens. The 24-hour volume of LUNC as of today is $667.75 million – around 2.3 trillion tokens exchanging hands during that period.
Even if the entire 6.15 trillion tokens exchange hands in a single day, that would only reduce the circulating supply by around 700 billion tokens to 6.07 trillion.
If LUNC reached $1 per token, it would lead to a market cap of about $6 trillion for a network that developers are no longer using to build decentralized apps (dApps) and that also lacks a dedicated team to provide updates and new features to expand the ecosystem.
In addition, most of the trading of LUNC is taking place within centralized exchanges such as Binance, Gate.io, and Huobi, data from CMC indicates. These exchanges may not embrace or support the implementation of the 1.2% tax and may opt to delist the token if the community ultimately approves the proposal.
In this regard, Binance recently informed its users that LUNC deposits and withdrawals via the Ethereum network, BNB Smart Chain, and Polygon Network will be suspended indefinitely on 7 September. The decision comes as a result of the shutdown of the Shuttle bridge of Terra Classic.
Users will still be able to make transactions with the token by using the Terra Classic network but it may take longer for those to be validated as the network’s processing speed has diminished significantly since the ecosystem imploded.
In the past 24 hours, over $300 million worth of LUNC have been exchanged via Binance, this being the most widely used CEX for trading the token. If Binance will no longer support trading for LUNC via these networks, trading volumes may decline as transaction fees may increase as a result of the shutdown of the Shuttle bridge.
Recently, another hot project in the crypto space called Lucky Block introduced a 1% monthly token burn starting on 30 September this year.
Other Related Articles:
- 7 Best Deflationary Cryptocurrencies
- Top Cryptos to Buy Under $1 in 2022
- 11 Best Shitcoins that Could Explode and Produce 10x Gains
Tamadoge - The Play to Earn Dogecoin
- '10x - 50x Potential' - CNBC Report
- Deflationary, Low Supply - 2 Billion
- Listed on Bybit, OKX, Bitmart, LBank, MEXC, Uniswap
- Move to Earn, Metaverse Integration on Roadmap
- NFT Doge Pets - Potential for Mass Adoption