What Is the LUNC Tax Burning Proposal 2025?

By 2025, the reduction of the tax burn rate to 0.8% and the staking mechanism of LUNC significantly supported price stability, with over 9 trillion tokens having been burned. The increase of centralized exchanges’ integration and new DeFi applications has raised the daily burn volume to 4.2 billion, with the total locked value growing to 42 million USD, marking a strategic shift towards sustainable long-term growth rather than short-term gains.

Latest developments of Luna Classic (LUNC) in 2025

The LUNC tax burn mechanism has significantly evolved since its initial implementation. By 2025, the Terra Classic ecosystem will continue its revitalization efforts through several key developments:

• Reduced tax rate: The original tax rate of 1.2% has been adjusted to 0.8%, balancing the destruction efficiency and trading volume.
• Centralized Exchange Integration: More centralized exchanges have integrated the burn mechanism, significantly improving efficiency.
• Cumulative destruction results: Since implementation, over 900 trillion LUNC tokens have been destroyed through the tax mechanism.

Terra Classic governance introduces additional practical features to complement the burn mechanism, including enhanced staking rewards and new on-chain DeFi applications. These developments help stabilize compared to previous years. LUNC price Volatility.

Market indicators show improvements in sustainability:

The increase in participation from major trading platforms is crucial for the tax burn effect. Although the initial implementation faces challenges from off-chain transactions, strategic cooperation with exchanges has created a more comprehensive burn ecosystem.

Despite these improvements, Terra Classic continues to face competition from new blockchain projects that offer similar deflationary mechanisms but are built on more advanced technology.

The Terra Classic community remains focused on sustainability rather than short-term price fluctuations, marking a significant shift from the early narrative.

Burning for a future of 1 dollar - Interpreting the LUNC tax burn proposal

🔹 The staking mechanism and the 1.2% tax burn scheme effectively boost LUNC’s surge.

🔹 It’s relatively difficult to implement a 1.2% tax fee burn in centralized exchanges.

🔹 Can “burning” help LUNC holders make a profit?

Introduction

The reverse market surge during a prolonged bear cycle is always uplifting. Recently, the proposal for burning taxes on Terra Classic has caused a sensation in the community, and LUNC has surged to a price peak.

The recent surge against the market originated from the generous staking mechanism launched by Terra Classic on August 27, where users can delegate LUNC to validators to earn an annual interest rate of 37.8%. Within 24 hours of the launch of this mechanism, more than 1% of the LUNC supply has already been staked. In addition, the tax burn proposal has added fuel to the upward momentum of LUNC.

What is Terra classic tax fee burning?

In simple terms, the Terra Classic tax burn proposal involves levying a 1.2% tax on all transactions on the Terra Classic chain. The community hopes to revitalize it through the burning of Terra Classic tokens. The main driver of this positive event is a Korean-American professor named Edward Kim. Edward Kim’s latest proposal content In the future, all activities on the Terra Classic chain will have a 1.2% tax, including: creating smart contracts, trading smart contracts, on-chain transactions, on-chain to CEX, CEX to on-chain, but governance voting and Staking are not subject to the 1.2% tax.

According to the content of Edward Kim’s proposal, this tax will be levied on all on-chain transactions, but since centralized exchanges (CEX) usually settle transactions off-chain, it is almost impossible to levy taxes on transactions within centralized exchanges. The exchanges must actively support the collection of this tax for the proposal to be implemented in transactions on the exchanges. Currently, Gate has released support for the Terra Classic on-chain transfer burn proposal. Announcement If the 1.2% tax proposal for LUNC receives community support, Gate will implement the burn tax on LUNC and USTC withdrawals and carry out the burn.

The proposal for the burn tax has led many to believe that this could be a decisive moment for LUNC. The underlying idea is to hope to reduce the supply of LUNC to avoid a situation where oversupply causes LUNC to plummet. However, the drawbacks are also quite obvious, as this tax burn makes transactions on the Terra Classic chain more expensive.

The implementation of the burn tax proposal is expected to take place between September 13 and September 20, coinciding with the Ethereum merge time. If it can be successfully implemented, the Terra Classic community believes that LUNC may once again experience a surge due to market attention.

LUNC soars in “burning”

With the effective assistance of the burning tax proposal, LUNC has started an upward trend since August 23. According to data from Santiment, while the price skyrocketed, LUNC’s trading volume also peaked on September 1, with a total trading volume across the network reaching 1.5 billion USD and a 24-hour increase of 85.1%.

At Gate, the trading volume and popularity of LUNC are also among the top, comparable to ETH, and even the spot trading volume once surpassed BTC, making it the second hottest trading cryptocurrency after ETH. As of September 7th, 12:00, the 24-hour spot trading volume of LUNC on Gate was $116 million, ranking third after BTC ($120 million); the 24-hour contract trading volume was $278 million, ranking second after BTC ($702 million) and ETH ($1.374 billion).

“Burning” = Making money?

Token burning is equivalent to a “deflationary” strategy in the world of cryptocurrency, which reduces the supply of tokens to achieve a “scarcity” effect, thereby driving up the price. In mid-August this year, Shiba Inu (SHIB) provided strong momentum for its price increase through token burning.

However, this simple concept does not seem to serve as a long-term support for a project token in the cryptocurrency market. For projects in the crypto market, “burning” is more like a marketing strategy that attracts people to buy towards the expected reduction in supply. In fact, it is the promotion of the burning event that drives up prices, rather than the burning of the tokens themselves.

Currently, the industry is not optimistic about the tax scheme for LUNC. According to analyses from several crypto media outlets, only a small portion of LUNC is likely to be burned, and some exchanges may choose to delist LUNC due to not supporting the 1.2% tax scheme.

_”The planned token burn tax for Luna Classic may only create a great story to attract naive investors. The vast majority of LUNC transactions occur off-chain on centralized exchanges like Binance and Gate. This means that even if the Terra Classic community successfully imposes a 1.2% burn tax on transactions, ultimately only a small portion of LUNC will be burned.”

The Road to the Revival of Terra

Since the UST collapse in May this year, Terra has been trying to save itself from falling into the abyss of zero. Do Kwon first proposed an ecological recovery plan, which led to the birth of Terra 2.0, creating a layer-1 Terra blockchain without algorithmic stablecoins, named Terra (LUNA), while the old blockchain is called Terra Classic (LUNC).

In June, a proposal to destroy 1.2% of all transaction tokens without a specific implementation plan was passed through a community vote. From May to June, Korean regulatory authorities and the U.S. SEC repeatedly conducted investigations and inquiries into Do Kwon and Terraform Labs. Meanwhile, LUNC continued to trade, but due to low liquidity, the price fluctuated significantly.

As September arrives, Terra community member Edward Kim has proposed a feasible measure for a 1.2% proposal on destroying transaction tokens – implementing a 1.2% tax fee burn on all on-chain transactions. In this post, Edward Kim outlines the pros and cons of implementing this measure and states that this tax scheme has many technical and economic implications, hoping the community will fully discuss and understand the pros and cons before deciding whether to implement it.

As a result of this post, LUNC has reached its first peak since the crash in May, hitting $0.000299, an increase of nearly 30000% compared to its historical low.

Conclusion

The tax burn proposal is like the best remedy for the severely impacted Terra, as a large amount of social traffic is currently flowing in, bringing price-boosting momentum for LUNC. At the same time, the clear advantages of long-term holding may also encourage more people to increase their LUNC holdings, slowing down its downward trend. Perhaps before waiting for the grand upgrade performance of Ethereum, we can first enjoy the exciting times of the past few days amid the long bear market.