Binance’s proposal for the Terra Luna Classic Burn Tax

Binance has shown the light at the end of the tunnel for the Terra Luna Classic (LUNC) community.

Through its CEO, Changpeng Zhao (CZ), it gave a proposal-challenge and at the same time a way to start “burning” LUNC and on all in-exchange transactions. It is understood that if the Terra Luna Classic community manages to respond, then we will most likely witness the rebirth of the blockchain that had collapsed spectacularly a few months ago.

CZ in an Ask Me Anything on Twitter, mentioned that Binance will be adding a radio button for those who wish to apply the burn. Later, in a post on the Binance blog, he gave more details about this proposal. Essentially it’s a “voting mechanism” for whether Binance should implement the 1.2% BURN TAX on the Terra Luna Classic.

How we arrived at the new proposal

Binance originally announced on September 9 that it would only apply the 1.2% tax to transactions within the Terra Luna Classic chain, such as deposits and withdrawals. CZ in its latest post justified the decision not to include intra-Binance transactions in the 1.2% BURN TAX, expressing the view that this would deter users from trading LUNC on Binance and force them to move to other exchanges:

“IF BINANCE CHARGED 1.2% PER LUNC TRANSACTION I DON’T THINK WE WOULD ACHIEVE ENOUGH BURN, BECAUSE MOST LUNC TRADERS WOULD MOVE TO OTHER EXCHANGES THAT WOULD NOT HAVE THE TAX”.

The three steps to… reversal

However, Binance didn’t stop at the above statement, but also suggested a solution for the Terra Luna Classic community. CZ presented a three-step plan that would help him decide whether to implement the tax burn or not.

The first step of the plan is to implement an “opt-in” button for LUNC tax burn. This button will be visible to LUNC holders and they will be able to activate it if they would like to burn 1.2% of their LUNCs on every transaction. If the number of LUNC holder users who choose to apply the TAX BURN exceeds 25% of the total LUNC held on Binance, then the exchange will proceed to the second step, which is to charge the 1.2% TAX BURN to those traders who have chosen to participate in it.

This TAX BURN will only apply to those who are willing to “burn” their coins. CZ explained the necessity of this step:

“THIS PREVENTS PEOPLE WHO DON’T HAVE THE LUNC FROM INFLUENCING THE VOTE. ALSO, IT GIVES EARLY ADOPTERS PEACE OF MIND THAT THEY ARE NOT THE ONLY ONES WHO WILL PAY AN EXTRA 1.2%. THE TAX WILL ONLY START WITH A 25% QUORUM. THIS WILL ENCOURAGE THEM TO CHOOSE MORE EASILY.”

Finally, if the number of users participating in the 1.2% BURN TAX exceeds 50% of the total LUNC held on Binance, then the third step of the tax burn implementation program will come into effect, which is to be applied to all LUNC transactions within Binance without restrictions.

However, it is made clear by Binance that if the required 50% in the second step is not achieved within one month after the completion of the first step, then the participation button will be removed altogether.

Big challenge though and time bomb

Already the Terra Luna Classic community has started informing its members about Binance’s challenge proposal, while also suggesting ways on how they can initially reach 25% and subsequently the big goal of 50%, which if implemented then we will probably be counting down to the big return of Terra Luna Classic.

It should be taken for granted that if Binance eventually implements Terra Luna Classic’s 1.2% BURN TAX, other major central exchanges will follow the same path.

This is the big opportunity for the Terra Luna Classic community. But at the same time it is also a time bomb, as if it doesn’t finally manage to… turn the game around, then things for the future of Blockchain will probably be very difficult.

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