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Binance to add opt-in button for 1.2% LUNC burn tax on all trades

Binance to add opt-in button for 1.2% LUNC burn tax on all trades

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Binance CEO Changpeng Zhao (CZ) was asked if Binance will ever apply a 1.2% tax to Terra Luna Classic (LUNC) off-chain transactions.

CZ answered the question during a Twitter AMA, stating that Binance would add an opt-in button for those who want to burn. However, he later published a blog post to introduce a “voting mechanism” for combustion.

Binance announced that it will apply a 1.2% tax refund only to on-chain transactions such as deposits and withdrawals on September 9. CZ started his latest post saying off-chain exchanges were not included because it would prevent users from trading LUNC on Binance.

CZ mentioned the involvement of game theory and said that tax burning would not work unless all centralized exchanges in the world applied it. He wrote:

“If Binance charged 1.2% per transaction, I don’t think we would burn much because most LUNC traders went to other exchanges that don’t have burn.”

Thus, CZ also acknowledged the desire of LUNC holders to see a reduction in supply and showed their willingness to listen to the Binance community.

Take part in the burning

In a blog post, CZ laid out a three-step plan to decide whether or not to apply a tax refund.

The first step in the plan is to implement an opt-in button for LUNC tax burning. This button is visible to LUNC holders and they can turn it on if they want to burn 1.2% of their LUNCs every transaction.

If the number of users opting for a tax refund exceeds 25% of Binance’s total LUNC, the exchange will enter the second phase, which will charge a 1.2% tax refund to all participants. for it.

This burn only applies to those who are willing to burn tokens. CZ explained the necessity of this step by stating:

“This prevents people who don’t have LUNCs from influencing votes. It also gives early adopters peace of mind that they won’t be the only ones paying the extra 1.2%. The tax only starts at 25% of the quorum. This should encourage them to participate more easily”

Finally, if the number of participating users exceeds 50% of the total Binance LUNC, the third phase of the plan will be triggered to apply the tax refund to all Binance LUNC transactions.

CZ concluded that if the 50% required in the second stage is not achieved within one month of completing stage 1, the opt-in button will be removed entirely.

Posted by: Binance, Exchanges

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