Things are not so obvious with LUNC burning mechanism and pump it caused
LUNC’s parabolic growth in early September was fueled by a proposal to include a 1.2% burning fee on every transaction made on the network. Billions of dollars poured into the project as investors looked for exposure to deflationary assetBut 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.
Binance, one of the largest exchanges in the world, issued a statement in which it told its users that they would not impose fees, bringing the daily burn volume to just $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.
For now, network access is close to being free, and an additional fee on transactions will reduce users’ activity even further. There are some signs of manipulation from validators in on-chain data that was intentionally inflated, as network activity at some point 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 September 15th, $34 million worth of LUNC tokens were issued, which raises an important question: who will buy all the volume put into the market? The main increase in trading volume that we saw earlier was generated from Binance, due to the lack of data and the lack of data that would reflect the previous catastrophic decline.
