Following the approval and implementation of the 1.2% tax burn, the Luna Classic community saw a staggering number of tokens sent to a dead wallet in just a few hours. Despite this, it seems that the price has not yet picked up since it is still in a downtrend.
The Luna Classic tax parameter change went live Wednesday and will continue until the supply reaches 10 billion tokens. Interestingly, just a few hours following the proposal's implementation, data from LUNC validator Stakebin reported that 9,456,872 had been burned from the 6.9 trillion overall current supply.
The 1.2% tax burn proposal states that deposits and withdrawals of Luna Classic via the Terra Classic network will be impacted. For deposits, transactions will be taxed by the Terra Classic network before it reaches cryptocurrency exchange platforms.
The balance will then be credited to the user's account in a particular CEX after the 1.2% tax deduction. For withdrawals, users will get the withdrawal amount minus the withdrawal fees charged by a cryptocurrency exchange platform and the 1.2% tax deduction by the network.
Based on the proposal, the main objective of implementing a "Tax + Burn'' mechanism on each buy-sell transaction of a 1.2% burn tax is aimed to "reduce the Total Supply" of Luna Classic. After the supply reaches the 10 billion target, the 1.2% burning mechanism will be "disabled."
Burning tokens or sending them to dead wallets is a common practice in the cryptocurrency world on the premise that it would positively impact the price of the token. This is based on the economic principle of the law of supply and demand where the price spikes if there is more demand and less supply.
Interestingly, despite burning more than 9 million LUNC via the tax burn mechanism, the price of the first Terra native token continues to trade in the red zone. LUNC traded $0.0002804 immediately after the implementation of the tax burn and saw an increase of 0.713% briefly when it traded $0.0002824.
As of 1:45 a.m. ET, Thursday, Luna Classic was trading down 7.22 at $0.0002805 with a 24-hour volume of $553,745,853, based on the latest data from CoinMarketCap.