Binance Will Apply 1.2% Transaction Tax To All LUNC Trades If 50% Traders Join

Binance has introduced a new proposal for the application of a 1.2% transaction tax on LUNC transactions. The cryptocurrency exchange still gives decision power to its users, but still pleases the developers who come up with Terra’s new proposal.

As updated in an earlier Coincu News article, Binance reluctantly implemented a 1.2% LUNC tax burn on LUNC spot trades as CEO Changpeng Zhao offered an alternative to LUNC, exchange to introduce a feature that allows users to opt-in with a 1.2% transaction fee.

This resolution was brought up in a discussion on Twitter after the CZ executive participated in the Twitter Space AMA held on September 23 by Terra Rebels.

After the discussion, CZ specifically shared the proposal he made in the official Binance blog. Specifically, Binance will support the implementation of a 1.2% burn tax on LUNC transactions.

However, once the opt-in account reaches 25% of the total LUNC held on Binance, the exchange will start charging a 1.2% tax to all traders who opt-in when they trade LUNC. In the case of 50% of traders participating, the exchange will apply a transaction tax of 1.2% to all LUNC transactions.

Earlier, the exchange was concerned that it was afraid of losing customers by imposing an extra 1.2% fee on transactions. Making this proposal demonstrates CZ’s ingenuity when Binance is in a neutral position. The decision is still in the hands of their users, but it still creates satisfaction for those who make Terra’s suggestions.

The proposal to burn the LUNC tax of 1.2% since its launch has been met with much controversy. The majority of the community disagrees with the proposed implementation because in addition to reducing the supply of LUNC, it brings a lot of risks to both LUNC, the exchange and users.

“While burning is good to reduce supply overhang, it should not be done at the expense of the coin itself. Adding an off-chain burn tax is likely to reduce volume, liquidity, and in the long run, prices, across the board. Major exchanges are unlikely to implement such a policy as it is both loss-making for them and unsafe for users. Even major exchanges with altruistic intentions cannot implement this tax for the safety of their users.”

Analysis of the application of Fatman’s proposal to burn the LUNC 1.2% tax

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