As the upcoming Terra Classic (LUNC) — formerly Terra (LUNC) — burning mechanism gained more hype, some crypto exchanges thought it would be a good idea to express their support. However, the crypto community quickly responded, calling out the exchanges for what some believe to be public relations stunts.
On Sept. 1, Terra community member Edward Kim submitted a proposal to implement a 1.2% tax burn for every on-chain LUNC transaction in an effort to revive the crypto. The transaction tax will be sent to a dead address, removing part of the circulating supply permanently. Following the proposal, the LUNC token soared by 250%, as the hype surrounding the project showed signs of life.
Because of this, crypto exchanges KuCoin, Gate.io and MEXC Global decided to express their support for the token-burning efforts of the Terra community. However, some were unhappy with the announcements, calling out the exchanges.
After posting an announcement that the exchange is supporting the token burn, KuCoin was called out by the pseudonymous Terra researcher FatMan, asking what they are doing to support it, given that the tax burn is implemented on-chain. The researcher described the announcement as a “nothingburger PR post” and suggested taxing actual trades instead.
How are you "supporting" anything here given that the burn tax will be forced on-chain? You can't opt out of it. It applies to all deposit and withdrawal transactions. Nothingburger PR post. Taxing actual *trades* would be newsworthy, but no big exchange is ever going to do that.— FatMan (@FatManTerra) September 7, 2022
In response to the criticism, Johnny Lyu, the CEO of KuCoin exchange, told Cointelegraph that their trading platform is neutral and people-focused. "We always respect the communities’ choice and are happy to help them in the way we can. The same on the tax proposal,” Lyu added.
Gate.io also jumped into the fray as the exchange announced that it “will implement the proposed on-chain burn on LUNC and USTC” after the proposal gets approved. Following this, a community member called out Gate.io, describing its announcement as wrong and misleading. The user argued that on-chain implementation is not within the exchanges’ jurisdiction and urged others to boycott the exchange and move on to other exchanges that truly support LUNC’s growth.
Tom Yang, the Chief Marketing Officer of Gate.io, commented on the matter. Yang told Cointelegraph that their exchange is committed to the communities of each project listed on the trading platform and this includes LUNC. According to Yang, "USTC and LUNC trades made on the Gate.io exchange are not on-chain activities." The executive said that no taxes will be charged on the spot and futures trading on their platform.
Unlike the other exchanges that only seemed to support the burn with words, MEXC Global held a time-limited burning event for the LUNC token. The exchange pledged to burn the spot trading fees for LUNC/USDT from Sept. 3 to 17. Back in May, MEXC supported Terra burning efforts by conducting a month-long buyback and burn event to support the revival of LUNC. Despite its efforts, the exchange was still unable to dodge the crosshairs of a critic as one community member demanded a permanent burn from the exchange.
Disclaimer: This article is updated with a reply from Gate.io. Cointelegraph reached out to MEXC Global but did not get a response.