Binance Completes First Week of LUNC Fee Burns with “Disappointing” Results

Binance, the cryptocurrency exchange, has completed its first week of burning Terra Classic (LUNC) fees, but the impact has been less significant than anticipated.

As reported by Coin68, Binance recently reversed its earlier stance by committing to burn all Terra Classic (LUNC) transaction fees rather than keeping them. This move was seen as a strategic gesture to placate the LUNC community, Binance users, and major institutions trading on the platform.

In September, the Terra Classic community approved a proposal to burn 1.2% of each LUNC transaction to reduce the over 6.7 trillion LUNC created during the LUNA-UST collapse in May—an initiative known as the “LUNC burn tax.” The community then requested exchanges, including Binance, to implement this change for their transactions.

However, CEO Changpeng Zhao faced a dilemma: applying this tax could lead to reduced transaction values, potentially driving users and trading volumes to other platforms not implementing the LUNC burn. This would be detrimental to Binance’s business, prompting Zhao to propose a different approach, requiring user support for the burn tax before a broader implementation.

Despite the backlash from the LUNC community, who accused Zhao of “breaking promises” due to previous support for the LUNC burn tax, Binance eventually conceded. Instead of burning user-held LUNC, the world’s largest cryptocurrency exchange decided to burn transaction fees collected from LUNC spot and margin pairs. Coin burn data will be released weekly on Mondays.

As of the evening of October 3, Binance disclosed the results of its first LUNC burn. Over the past seven days, the total fees collected from LUNC transactions amounted to $1.8 million, representing just 0.08% of the total supply. This figure falls short of the expectations of many in the LUNC community and indicates that trading volume for LUNC on Binance did not surge as anticipated.

At the current burn rate, it is estimated that it would take 15 years for Terra Classic to reduce its total LUNC supply from 6.7 trillion to just 10 billion.

The LUNC price has also reacted negatively to the disappointing burn results from Binance, falling over 7% in the past 24 hours. Nevertheless, the coin remains above its low from Monday (September 26), when Binance confirmed it would burn transaction fees to appease the community.

4-hour Chart of ETH/USDT on Binance as of 08:00 AM, October 4, 2022