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Terra’s Luna Classic Pumps 40% as Binance Plots Supply Burn

Terra’s Luna Classic Pumps 40% as Binance Plots Supply Burn

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Luna Classic, original make from the failed Terra blockchainseems to be making a comeback after the announcement that the world’s largest crypto exchange, Binance, is planning to cut the supply of the token.

The token, which trades under the name LUNC, is up around 40% in the last 24 hours, according to CoinGecko, making a miraculous return to the top 35 cryptocurrencies by market cap.

Still, its recent gains likely won’t mean much to Terra bulls, who bought in at over $100 in April. Currently, LUNC is trading at just $0.0003.

“Binance implements a burning mechanism to burn all trading fees from LUNC spot and margin trading pairs by sending them to the LUNC burning address,” the exchange says. announced on Monday.

“Burning” a token means sending it to a cryptocurrency address that is not controlled by any user. This effectively removes coins from the circulating supply, which is typically bullish in terms of price action.

In May, the opposite happened: in redemptions algorithmic stablecoin TerraUSD (UST) hit a record high and more LUNC had to be minted to compensate holders. This only put downward pressure on LUNC, requiring more tokens to mint to compensate UST holders for each successive redemption.

First, Binance scheduled implement an opt-in button for LUNC traders who voluntarily wanted to help burn tokens on the exchange. Users would voluntarily pay an additional 1.2% chargeback fee for each transaction, which would only kick in if enough users agreed to participate in the process. Terra Classic released a similar mechanism on the chain last week.

However, as CEO Changepeng Zhao (CZ) explained on Monday, the approach would not have worked in reality. – Our merchants won’t vote for it, he tweeted.

The Terra community was also not happy with the original plan. Some members of the Terra community called for a boycott of Binance, claiming that CZ had “broken its word” to implement a unilateral burn.

In contrast, in the new plan, all LUNC/BUSD and LUNC/USDT trades contribute to consumption of supplybut does not charge users any additional costs.

“This way we can be fair to all users,” CZ said. “The trading experience and liquidity will remain the same, and Binance can continue to contribute to the reduced supply of LUNC, which is what the community wants.”

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