LUNA Classic Burn: LUNC Spikes 40% as Binance Plans Supply Burn

09/27/2022By: L, Laura

Luna Classic Burn – Binance Plots to Cut LUNCs Supply

Failed Terra Luna Classic (LUNC) appears to be making a comeback following an announcement that Binance, the world’s largest cryptocurrency exchange, plans to cut the token’s supply, applying LUNA Classic burn to trades.

 

According to CoinGecko, the token, which trades as LUNC, has gained about 40% in the last 24 hours, miraculously returning to the top 35 cryptocurrencies by market cap.

 

Still, its recent gains will likely not mean much to the Terra bulls who bought in at over $100 in April. Currently, LUNC is still trading at just $0.0003.

 

Binance LUNC Burn

“Binance will implement a burn mechanism to burn all trading fees on LUNC spot and margin trading pairs by sending them to the LUNC burn address,” the largest exchange announced on Monday.

 

“Burning” a token means sending it to a cryptocurrency address that is not under the control of any user. This effectively removes coins from the circulating supply, which is usually bullish for price action.

The reverse happened in May: As redemptions for the algorithmic stablecoin TerraUSD (UST) hit record highs, more LUNC needed to be minted to compensate holders. This only put downward pressure on LUNC, requiring more tokens to be minted to compensate UST holders with each consecutive redemption.

 

Initially, Binance planned to implement an opt-in button for LUNC traders who wanted to voluntarily help burn the token’s supply at the exchange. Users would volunteer to pay an additional 1.2% burn fee on every trade, which would only kick in if enough users had agreed to partake in the process. Terra Classic launched a similar mechanism on-chain last week.

 

However, as CEO Changepeng Zhao (CZ) explained on Monday, the approach wouldn’t have worked in reality. “Our traders won’t vote for it,” he tweeted.

 

The Terra community was also unhappy with the initial plan. Some members of the community called to boycott Binance after claiming CZ had “reneged on his word” to implement a unilateral burn.

 

In contrast, the new plan makes all LUNC/BUSD and LUNC/USDT transactions help burn supply — while charging users no additional fees.

 

“This way we can be fair to all users,” CZ said. “The trading experience and liquidity remain the same, and Binance can still contribute to the supply decrease of LUNC, which is what the community wants.”

 

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