Binance Provides Choose-in Button for 1.2% LUNC Combustion Tax on All Trades – CryptoSlate

Binance CEO Changpeng Zhao (CZ) was asked if Binance will ever impose the 1.2% tax on Terra Luna Classic (LUNC) off-chain trades.

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

Binance announced that it will only apply the 1.2% tax burn to on-chain transactions such as deposits and withdrawals on September 9th. CZ started his latest post that off-chain exchange trades were not included as it would discourage users from trading LUNC on Binance.

Mentioning the involvement of game theory, CZ said tax burning wouldn’t work unless all the world’s centralized exchanges applied it. He wrote:

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

With this in mind, CZ also acknowledged the desire of LUNC holders to decrease supply and showed a willingness to listen to the Binance community.

Sign up to burn

In his blog post, CZ presented a three-step plan for deciding whether or not to use tax burn.

The first step of 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 use up 1.2% of their LUNCs on each transaction.

When the number of users opting to implement the tax burn exceeds 25% of the total LUNC held on Binance, the exchange moves to the second step, which calculates the 1.2% tax burn for all traders opting for the Participation decide.

This burn only applies to those willing to burn their tokens. CZ justified the need for this step with the words:

“This prevents people who don’t hold a LUNC from influencing the voting. It also gives early adopters peace of mind that they aren’t the only ones paying 1.2% more. The tax only occurs if there is a quorum of 25%. This should encourage them to sign up more easily.”

Finally, when the number of users logging in exceeds 50% of the total LUNC held on Binance, the third step of the plan will be initiated to apply the tax burn to all LUNC transactions within Binance.

CZ concluded that if the required 50% in step 2 is not met within one month of completing step 1, the opt-in button will be removed entirely.

Posted in: Binance, Exchanges

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