Binance announced updates to the deposit and withdrawal fees for LUNC and USTC on the Terra Classic network. This comes after the community passed proposal 5234, first presented by Akujiro, to lower the tax burn from 1.2% to 0.2% and take 10% of the collected seigniorage and add it to the community pool at the end of the epoch.
The proposal received 75% votes in affirmation as validators and other members of the community supported it based on Binance CEO CZ’s recommendation to reduce fees.
LUNC Proposal 5234
According to Binance’s announcement, the platform will reduce the 1.2% consolidation fee for all LUNC and USTC deposits received to 0.2%. On withdrawals, users will receive the withdrawal amount minus withdrawal fees charged by Binance and the 0.2% tax burn.
Several prominent members of the community, such as KuCoin, and Terra Rebels lead developers Edward Kim and Alex Foreshaw, have advocated for the proposal.
Kim, the co-author of the proposal, had recently explained that reducing the tax to 0.2% and allocating 10% of funds to the community pool for Terra Classic chain developments would be helpful because the community pool can be used for emergency funds. These include attracting decentralized applications (DApps) and projects back to the Terra Classic chain, thereby repaying the devs to scale up the chain.
“As new validators come back, I believe we will naturally see an uptick in on-chain volume as validators attract new delegations. The uptick in volume will be confounded with the unlocking of new utility on the chain and thus may not be accurately measurable with the timing of this proposal.”
Binance has played a crucial role in increasing the burn rate with its LUNC trading fee burn decision. However, the crypto exchange was at a fix for the longest time to implement the 1.2% tax burn.
Binance initially discarded the idea of a tax burn. Then, it planned to introduce an opt-in button for those wishing to apply the burn. But later, CEO Changpeng Zhao (CZ) decided to implement a mechanism to burn all trading fees on LUNC spot and margin trading pairs by sending them to the LUNC burn address.
Binance further revealed that the new 0.2% LUNC tax burn will take effect at epoch 98.
Luna Classic (LUNC) suffered fresh declines this week after sliding lower over the weekend. It was currently trading at $0.00024.