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Binance CEO Says Lesser Fees Would Lead To Greater Terra Classic (LUNC) Burns

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CZ believes the lower the fees, the greater the burn, and he has the numbers to back it up.

In a recap of an AMA held three days ago shared by the Terra Rebels, Binance chief Changpeng Zhao, fondly called CZ, asserted that lower fees would produce greater burns.

“…to burn more and more LUNC, we need to have a minimal fee so that our LUNC fee revenue becomes the highest, and then we burn all of all revenue,” said CZ explaining that higher fees discourage trading activity. “Just charging more fees does not mean we have more income. Very often, charging more means you have less income. I think most of LUNC members think that if we charge 1.2%,  Binance will burn more LUNC, but it is a mistake.”

He also said:

“… we burn all of our revenue. We do not make any money from LUNC trading fees. We burn it all.”

He also encouragesd other exchanges to burn LUNC but said he do no control them.

“I also encourage other exchanges to do it… But I and LUNC community do not control other exchanges. So it’s up to every body else; we have done our part.”

It bears mentioning that despite earlier pressure from the Terra Luna Classic (LUNC) community to apply a 1.2% tax to off-chain activity, Binance opted to burn the 0.1% fees it obtains from trading instead. While this is a considerably lower fee, it has managed to burn almost twice as much as the 1.2% tax within the same period, with about 8.5 billion LUNC burned so far. 

Notably, despite the hype surrounding the 1.2% burn tax on on-chain activities, the tax has failed to meet expectations. For example, Terra developer Alex Forshaw highlighted in a recent blog post that the on-chain volume has declined by as much as 90% since its implementation.

Consequently, a new proposal has been launched to reduce the tax to 0.2% while reserving 10% of the tax obtained for the development of the chain. The proposer, known as Akujiro, hopes that the proposal can attract people who moved to central exchanges to avoid the tax back to on-chain activities.

Notably, Vegas, one of the most popular rebels, has said he thinks it is too early to change the tax parameter. However, the Terra Rebel has launched a poll opting to vote in favor of the community.

On the other hand, Alex Forshaw, who has always been opposed to the tax, hopes that the lower tax rate combined with the CosWasm update will attract a flurry of decentralized applications (DApps).

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Mark Brennan
Mark Brennan
Mark Brennan has been active in the cryptocurrency sector since 2014. His love and passion for the nascent industry drove him to develop interest in writing about important developments and updates about cryptocurrencies and blockchain. Brennan, who holds a Masters degree in Business Administration, learned about the potential of blockchain technology. Aside from crypto journalism, Brennan runs an education center, where he educates people about the asset class.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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