Although the new measure by the crypto exchange aims to decrease hyperinflated supply of LUNC tokens, it is unlikely that it will have the desired effect traders desire. Luna classic (LUNC), a remnant token from the Terra blockchain that was lost before its reboot, surged Monday after Binance, the largest cryptocurrency exchange in the world, revealed a plan to decrease the supply.
According to cryptocurrency price tracker coinGecko, the LUNC price jumped 60% upon hearing about it, and reached as high as $0.00032. At press time, the token was worth $0.00029.
Many traders were surprised by the sudden rally, particularly since many had placed bets that the LUNC would drop on the news that Interpol had issued a red notice for Terra’s founder Do Kwon. According to Coinglass, $1.5 million worth of short positions were liquidated in the course of the day. This is the largest amount in three months.
News of interpol’s red notice on Luna’s founder Do Kwon did not affect LUNC’s Price
One of the most significant implosions in crypto markets was the Terra ecosystem’s May collapse. This caused the market to plummet by $60 billion and led to some firms becoming insolvent. South Korean authorities issued a warrant earlier this month for Kwon, accusing him of fraud.
Many developers who were building applications on the original-and-now-abandoned blockchain have moved over to the newly rebooted Terra blockchain or to other networks like Polygon or Kadena that are seen as having more staying power. Analysts have suggested that LUNC may now be a ” meme cryptocurrency” with limited use beyond speculation and profit-or loss making.
In anticipation of a community-approved plan that would reduce the token’s hyperinflated stock, the LUNC token surged earlier this month.
The “supply-burn plan” aims at destroying – in crypto terms – 1.2% for every LUNC transaction. Although the mechanism is not applicable to trading or buying tokens on exchanges it can be used to reduce supply. However, MEXC and other crypto exchanges have voluntarily adopted the supply reduction mechanism.
However, the recent announcement by Binance regarding a burn scheme may not have as much impact as many traders believe.
A statement states that the crypto exchange will eliminate the equivalent of trading fees for traders who sell or buy LUNC. Binance traders may choose to apply the 1.2% “burn fees” on their own initiative. The trading fees for Binance are as low as 0.1% for small traders and as high as 0.02% in large traders. This is a fraction of the 1.2% transaction rate.
Crypto trader Ogle stated in a tweet that traders who move the largest volume on the exchange (e.g. market makers) are less likely to choose 1.2% fees. He told CoinDesk that Binance’s burn program “is almost completely useless to LUNC people, but they don’t realize it.”