There Is Big “If” in LUNC Burning Mechanism That Caused Most Recent Market Pump

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Arman Shirinyan

Things are not so obvi­ous with LUNC burn­ing mech­a­nism and pump it caused

LUNC’s par­a­bol­ic growth in the begin­ning of Sep­tem­ber was fueled by the pro­pos­al to include a 1.2% burn­ing fee on every trans­ac­tion made on the net­work. Bil­lions of dol­lars poured into the project as investors were look­ing for the expo­sure to the defla­tion­ary asset, but there is a catch.

The burn­ing vol­ume, accord­ing to the pro­pos­al, would exceed $4 mil­lion in a day if cen­tral­ized exchanges accept the burn­ing fee, and that is where poten­tial prob­lems for Luna appear.

One of the biggest exchanges in the world, Binance, has released a state­ment in which they told their users that they will not imple­ment the fee, which puts the dai­ly burn­ing vol­ume to only $55,000.

For a project with a $3 bil­lion mar­ket cap­i­tal­iza­tion, less than $100,000 of dai­ly burn­ing vol­ume is insignif­i­cant and will not have any effect on the mar­ket val­ue of the token.

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As for now, the usage of the net­work is close to being free, and an addi­tion­al fee on trans­ac­tions will decrease the activ­i­ty of users even more. The on-chain data con­tains some signs of manip­u­la­tion from val­ida­tors that have inten­tion­al­ly inflat­ed the num­ber of trans­ac­tions on the net­work, as at some point the net­work’s activ­i­ty exceed­ed the total cir­cu­la­tion of tokens.

All these fac­tors show that the ral­ly we saw pre­vi­ous­ly was based on on-chain manip­u­la­tion and a ques­tion­able pro­pos­al that will not have the desired effect on the mar­ket val­ue of the token, con­sid­er­ing the action that cen­tral­ized exchanges are taking.

On Sept. 15, $34 mil­lion worth of LUNC tokens were released, which rais­es an impor­tant ques­tion: Who is going to buy all the vol­ume inject­ed on the mar­ket? The main increase in the trad­ing vol­ume we saw ear­li­er orig­i­nat­ed from Binance due to relist­ing and lack of data that would show a pre­vi­ous cat­a­stroph­ic drop.



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