- The 1.2% tax cut proposal is now live
- The proposal will be terminated as soon as the total supply of LUNC reaches 10 billion
- As of 1:45 AM ET on Thursday, Luna Classic traded down 7.22 to $0.0002805
After the approval and implementation of the 1.2% tax cut, the Luna Classic community saw a staggering number of tokens sent to the dead wallet in just a few hours. Despite this, the price does not seem to have risen yet as it is still in a downtrend.
The Luna Classic tax parameter change was announced on Wednesday and will continue until the supply reaches 10 billion tokens. Interestingly, just a few hours after the implementation of the proposal, the Stakebin LUNC validator data registered that 9,456,872 were burned out of the 6.9 trillion total current supply.
The 1.2% tax cut proposal states that it will affect Luna Classic deposits and withdrawals through the Terra Classic network. For deposits, transactions will be taxed by the Terra Classic network before they reach cryptocurrency exchanges.
The balance will then be credited to the customer’s account at the designated CEX after deducting a tax of 1.2%. For withdrawals, users will receive the withdrawal amount minus the withdrawal fees charged by the cryptocurrency exchange platform and a tax deduction of 1.2% of the network.
Based on the proposal, the main objective of implementing the “Tax + Burn” mechanism on each purchase transaction of 1.2% burn tax aims to “reduce the total supply” of Luna Classic. After the acquisition reaches the 10 billion target, the 1.2% burn mechanism will be “disabled”.
Burning tokens or sending them to dead wallets is a common practice in the cryptocurrency world under the assumption that this would positively affect the token price. This is based on the economic principle of the law of supply and demand where the price rises if there is more demand and less supply.
Interestingly, despite burning more than 9 million LUNC through the tax burning mechanism, the price of the first Terra native token continues to trade in the red zone. LUNC traded at $0.0002804 immediately after the implementation of taxation and saw a brief increase of 0.713% when it traded at $0.0002824.
As of 1:45 AM ET on Thursday, Luna Classic is trading up 7.22 at $0.0002805 with a 24-hour volume of $553,745,853, based on the latest data from CoinMarketCap.