What happened to 6 times LUNC in two weeks and 4 times LUNA in one day?

LUNC restarted staking and started a 1.2% burning tax, pushing its two-week maximum six-fold increase. On August 26, Beijing time, Terra Classic resumed staking and governance, and the current LUNC staking yield is 14.52%. At the same time, the Terra community has passed proposals 3568 and 4159, which will introduce a 1.2% tax fee for on-chain transactions of LUNC and USTC on the Terra Classic network to burn LUNC until its total amount drops to 10 billion. The current total amount of LUNC is about 61.5 billion.

The collection of LUNC transaction tax is expected to be launched on September 20, and Binance spot and leveraged trading will not be affected. According to the LUNC community announcement, the tax burning mechanism is expected to be launched on September 20 at the Terra Classic (LUNC) network block height 9,475,200. Since the current transactions of LUNC and USTC are concentrated in centralized exchanges rather than on-chain, the implementation of this proposal requires the cooperation of centralized exchanges. KuCoin, MEXC and Huobi have issued announcements to support the burning proposal, but according to the announcement of Binance, the exchange with the highest trading volume, LUNC and USTC will only be affected by a 1.2% tax on deposits and withdrawals, and no tax will be charged on spot and leveraged trading in the exchange. According to Coingecko data, Binance accounts for 56% of LUNC's trading volume in CEX; Binance accounts for 64% of USTC's trading volume in CEX. According to normal logic, if second-tier exchanges such as MEXC charge additional taxes and fees, liquidity and trading volume will further shift to Binance. Therefore, Binance’s current regulations that spot and leveraged trading do not support taxes and fees will lead to difficulties in the implementation of tax collection.

LUNC's 6-fold surge in the short term and Binance's non-support for tax collection have increased the uncertainty of its subsequent trend. Current traders should pay attention to trading risks and do not constitute investment advice. According to the burning target of the governance proposal, the total amount of 61.5 billion will be reduced to 10 billion through the collection of taxes and fees. Assuming the market value remains unchanged, the coin price will increase by 6 times. At present, the burning has not yet started, but the LUNC coin price has soared 6 times in two weeks, overdrawing the burning expectations. At 21:00 on the evening of September 8th, Beijing time, Binance announced that spot and leveraged transactions would not charge 1.2% taxes. After that, the LUNC coin price fell rapidly by 15% in a short period of time, and continued to fall after a brief correction.

The roadmap released by the LUNC community also includes the re-anchoring of USTC and the reconstruction of the on-chain ecosystem, but this is by no means easy and the LUNC community has not provided any operational implementation measures, so subsequent developments still need to be tracked.

LUNA surged after LUNC's performance weakened, and market opinion focused on capital speculation. According to public information, LUNA's fundamentals have not changed.