The 1.2% tax burn is here.
reXx Member of the Terra Rebels announced the update:
Happy burn day #LUNC community. The 1.2% Burn Tax is officially live.
— reXx™ (@reXxTerraRebels) September 21, 2022
After weeks of anticipation and excitement, Terra Classic’s tax parameter change goes live. Consequently, users will be charged a 1.2% tax on all on-chain transactions, with the collected fees sent to the Terra burn wallet to bring down the excess LUNC supply.
Notably, this tax rate is set to run till the total LUNC supply drops to 10 billion tokens. To put things in perspective, the current LUNC supply sits at about 6.9 trillion. To achieve this goal, the asset supply will have to be reduced by 99.82%.
It bears mentioning that in a previous analysis done by The Crypto Basic, considering user opinions, it will take about a decade for the LUNC supply to be reduced to 40 billion at a burn rate of 1.2%, provided volume can be maintained and price can be kept low. Notably, based on this analysis, with a hypothetical market cap of $40 billion, the asset may be able to clinch the $1 price point within seven years. Notably, using this same hypothetical market cap and a 10 billion supply on The Coin Perspective reveals that the asset quadruples this price projection and could clinch the $4 price point.
However, it will be interesting to see how the network will continue to keep volume high while keeping the price low even as supply reduces. As highlighted by LUNC Burn, an unofficial Twitter account tracking LUNC burn activity, hours before the burn went live, about 4.1 billion LUNC had been burned without the parameter change. It will be interesting to see how this number changes over time.
Notably, the token ranks 3rd by 24-hour trading volume on Binance, with $210 million at press time.
Meanwhile, two more trading platforms pledged support for yesterday’s 1.2% tax burn proposal with two very different implementations. While Crypto.com will charge only deposits and withdrawals, eToro may also apply it to off-chain transactions (Trading), splitting the tax rate among buyers and sellers by adding a 6% charge on top of their standard 1% tax for both parties.
At press time, LUNC is trading at the $0.0003036 price point, 0.55% lower than in the last 24 hours.