Mid-Sunday, Luna Classic, LUNC, hit $0.000365 as traders awaited Binance’s final token burn numbers. For the week, the price has increased over 70%, and for the month it’s up over 44%.
LUNC is the token of the now infamous Terra blockchain, which collapsed in May and was one of the most dramatic crypto market collapses.
The crypto market value was wiped out by $60 billion, and some crypto firms became insolvent as a result. A fraud arrest warrant was issued for Kwon earlier this month by South Korean authorities.
Binance Announce the “Supply Burn Scheme”
Binance, the world’s largest crypto exchange, announced on Monday that it will reduce the supply of the token,
“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,” tweeted Binance on September 26.
— Binance (@binance) September 26, 2022
A token can be burned by sending it to an address that is not controlled by the user. As a result, coins are removed from circulation, which typically accelerates price movement.
As soon as the announcement was made, LUNC gained over 55%, according to CoinGecko, rising from $0.00018 to $0.00031.
“Thank you @cz_binance for listening to the wishes of the community 🙏🙏🙏 we hope you will continue to support us through the ups and downs ❤️🔥” said one Twitter user on Binance’s post.
The Way the Scheme Works
As reported by Coindesk, when traders sell or buy LUNC, the cryptocurrency exchange will destroy the equivalent of the trading fees. Binance traders may opt to apply the 1.2% “burn fee” voluntarily.
For large traders, Binance’s trading fees range from 0.1% to as low as 0.02%, making the burn rate just a fraction of the average transaction burn rate of 1.2%.
Crypto trader Ogle noted on Twitter that market makers, who move the most volume on the exchange, are unlikely to choose the 1.2% fee.
Binance is NOT doing the 1.2% tax. They are burning the *trading fees*
The trading fees are almost 0% for most bigger players (market makers), and a very tiny % for those who are regular traders.
This is not big/good news…
— ogle (@cryptogle) September 26, 2022
“ATTENTION #lunc #LUNCCcommunity folks –. Binance is NOT doing the 1.2% tax. They are burning the *trading fees*. The trading fees are almost 0% for most bigger players (market makers), and a very tiny % for those who are regular traders. This is not big/good news…”
He spoke to CoinDesk that the Binance’s scheme “ “is almost totally useless to LUNC folks, but they don’t realize it.”