The plan to tack on a 1.2% burning fee to every network transaction was what drove LUNC’s exponential rise at the start of September.
Investors eager for exposure to the deflationary asset poured billions of dollars into the project, but there is a catch. If centralized exchanges accept the burning fee, the proposal claims that the burning volume would approach $4 million in a single day. This is where possible issues for Luna arise.
The daily burning volume is now only $55,000 thanks to a statement made by one of the major exchanges in the world, Binance, informing their users that they will not impose the fee.
Less than $100,000 in daily burning volume is negligible for a project with a $3 billion market capitalization and will not have any impact on the token’s market value.
Currently, using the network is almost free, and adding a price for transactions will make users’ activity even less active. Since at one point the network’s activity exceeded the total circulation, the on-chain data shows some evidence of manipulation by validators who purposely boosted the number of transactions on the network.
All of these indicators indicate that the preceding spike was based on dubious proposals and on-chain manipulation, which will not have the expected impact on the token’s market value given the actions that centralized exchanges are taking.
On Sept. 15, $34 million worth of LUNC tokens were released
A critical concern is raised by the release of $34 million worth of LUNC tokens on September 15: Who will purchase the entire volume pushed into the market? Due to relisting and a lack of data that would indicate a previous catastrophic decline, Binance was mostly responsible for the spike in trading volume that we previously saw.
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