After a steep decline in May, $LUNC has increased by more than 100 percent in the previous week. The increase has been even more significant over the last month, with the price increasing by 489% from USD $0.000095 on August 8 to a high of USD $0.00054 on Thursday morning.
New burning mechanism
Recent gains in the price of LUNC correlate with the advancement of a Terra Classic community proposal to introduce a new burn mechanism for the cryptocurrency. In an effort to turn LUNC into a deflationary asset, the plan, which was proposed at the end of July, imposes a 1.2% tax on every transaction on the network.
According to the idea, the new “tax” would be automatically delivered to a no-access address and applied to all blockchain activity, including LUNC and USTC transfers between wallets and smart contracts (the equivalent of burning or destroying tokens). The act of burning will decrease the quantity of LUNC.
Support from exchanges
A number of bitcoin exchanges have expressed their support for the move. Binance, the largest digital currency exchange in the world, announced on Thursday that it will review and revise the minimum withdrawal amount, maximum withdrawal amount, and withdrawal fees for LUNC and USTC via the Terra Classic network; however, it will not apply the tax to Spot and Margin trades.
In its announcement today, Binance also said that it would add LUNC trading against the stablecoin Tether (USDT) to its list of trading pairings beginning on Friday. This might be one of the factors for the recent price increase.
Despite the fact that the charge cannot be imposed while trading the token on centralized exchanges, as pointed out by a member of Terra’s governance forum, some platforms have elected to accept it voluntarily. KuCoin, Gate.io, and MEXC Global have stated that they would support the concept once it has been deployed formally on the network.
The vote on the proposal to modify the tax parameter by 1.2% is scheduled for this Saturday, September 10. If authorized, the network modifications will be applied on September 20, CoinGape said.
Many may be surprised by the momentum, given LUNC has been the target of debate this year. In April of this year, the price of the cryptocurrency peaked at USD $119 before plunging to zero in May, when its sister token UST, an algorithmic stablecoin that was meant to maintain a 1:1 peg to the US dollar, lost its parity.
The tragedy, which caused Terra’s whole project to collapse, wreaked devastation on the cryptocurrency industry as a whole. Soon later, the project was revived, and the previous version was rebranded as Terra Classic. Similarly, with tokens, the new version remained LUNA, while the prior version became LUNA Classic (LUNC).
Will LUNC be able to continue its bullish run?
Despite Luna Classic’s significant price gain, a number of experts seem to concur that the rally will not continue long, due in part to the project’s reputation and the pessimistic market outlook in general.
Howard Greenberg, a cryptocurrency trainer at Prosper Trading Academy, remarked on LUNC’s price behavior, stating, “This is a complete speculative play and makes LUNC a meme coin at this point.” “This is likely to be a very volatile trade, so if you decide to engage it, you should have an exit strategy for both the downside and the upside.”
Cover image: Man on the moon – Universal Public Domain.
© 2024 Cryptopress. For informational purposes only, not offered as advice of any kind.
