Binance Takes a Hit: Burns All LUNC Trading Fees to Satisfy Everyone

The cryptocurrency exchange Binance has decided to reverse course and burn all trading fees for LUNC to appease its users.

As reported by Coin68, one of the hot topics in the crypto community over the weekend was Binance CEO Changpeng Zhao’s refusal to implement a 1.2% burn mechanism on each LUNC transaction, also known as the “LUNC burn tax.”

This all started when the Terra Classic (LUNC) community proposed burning 1.2% of the value of each LUNC transaction on the blockchain as a general tax to reduce the enormous supply of trillions of coins created during the LUNA-UST crash.

However, Binance CEO Changpeng Zhao later rejected the LUNC community's request to apply this 1.2% burn tax on each LUNC transaction. Zhao argued that this would harm Binance users and market makers, potentially driving them to other platforms without such a tax. Additionally, Zhao noted that the tax would be ineffective if only a portion of the community adhered to it while others waited for LUNC prices to rise.

To address the concerns of the LUNC community, Zhao proposed a solution allowing Binance users to choose whether their transactions would incur the 1.2% burn tax. If trading volumes exceed certain thresholds set by Binance, the tax would become mandatory.

Despite this, the Terra Classic community remained unconvinced, accusing Zhao of “flip-flopping” since he had previously stated that Binance would comply with the LUNC burn tax if the proposal was approved and applied to on-chain transactions.

By the afternoon of September 26th, Binance made an unexpected announcement regarding the LUNC tax. The world's largest cryptocurrency exchange will now "burn all spot and margin trading fees for LUNC pairs" in the form of LUNC tokens. Currently, the base trading fee for LUNC spot pairs is 0.1%, with a 24-hour trading volume nearing $600 million.

The amount of LUNC burned weekly will be updated by Binance every Tuesday, with the burn occurring on Mondays. This change will be in effect indefinitely until further notice.

In essence, this move represents Binance's willingness to absorb the loss of revenue from LUNC trading fees to satisfy both the LUNC community and its users. This approach not only addresses the commitment to burn part of the LUNC supply but also aims to retain users. This strategic maneuver by Binance ensures the interests of all parties are balanced.

Binance CEO Changpeng Zhao stated on Twitter:

“We have decided to burn all spot and margin trading fees for LUNC on Binance. The fees will be aggregated, converted to LUNC, and sent to the burn address. The burned funds will be our loss, not the users'.

This way, the benefits for all parties will be equitable. Trading experience and liquidity remain unchanged, while Binance will contribute to reducing the LUNC supply, aligning with what the community wants for the token.”

Following Binance's reversal, LUNC's price surged nearly 30% on Binance, reflecting the positive reaction from users.

15-minute chart of LUNC/USDT on Binance as of 5:20 PM, September 26, 2022