Here’s Why Binance Will Suspend Terra Classic Transactions

The largest cryptocurrency exchange in the world, Binance, had been in the news after briefly stopping withdrawals of the stablecoin USD Coin (USDC) in December 2022. Customers were withdrawing money from the exchange at a significant rate as worries about the exchange developed. The mounting worries reflected a loss of confidence in centralized exchanges as a result of numerous industry scandals in 2022.

However, Binance makes headlines yet again on similar lines, but on a lighter note. Top cryptocurrency exchange Binance has informed that on January 14 at 3:50 a.m. UTC, it would temporarily halt deposits and withdrawals for LUNC, USTC, and ANC via the Terra Classic (LUNC) network. This is as a result of the Terra Classic (LUNC) network upgrade caused by the most recent community suggestion.

It is planned for the Terra Classic (LUNC) network update to start at epoch 15,029, or about Jan. 14, 4:50 a.m. UTC, and last for roughly three hours. While temporary suspensions of deposits and withdrawals will apply, trading in LUNC, USTC, and ANC will not be impacted by the network update. The Terra Classic (LUNC) network’s withdrawal fees for LUNC, USTC, and ANC will be reviewed and, if necessary, adjusted by Binance, according to the company’s website. Once the improved network is judged reliable, deposits and withdrawals for the Terra Classic (LUNC) network will once again be accepted, however, users may not receive any more notice of this.

Binance Reduces LUNC Burns

By effectively banning LUNC reminting from burns, the proposal at the core of the Terra Classic network update attempts to deprecate the seigniorage reward policy. It also seeks to raise gas prices by five times (5x) to capitalization the community pool and increase validator or staking incentives. The proposal claims that over the past four weeks, LUNC’s on-chain burn rate has drastically lowered and will continue to do so as Binance cuts back on burns.

According to reports, Binance declared that it will begin to burn 50% of the LUNC spot and margin trading fees instead of 100% in response to recent developments where the LUNC burn is being reminted as a development fund. The LUNC community suggests a five-fold increase in gas taxes in light of the decrease in burn rate. “In terms of market value, Terra Classic’s gas prices are 18.42 times less expensive than Terra 2.0’s. Terra Classic gas prices will still be 3.68 times less expensive than Terra 2.0 even with a 5x increase “which supports the argument for raising the gas tax.