The Terra Luna Classic (LUNC) community has approved a long-discussed governance proposal that triples the network's on-chain burn tax. Proposal #12223, which passed on Sunday with overwhelming support, raises the tax rate from 0.5% to 1.5%, effective August 2, 2026.

The tax increase is the latest in a series of community-driven efforts to accelerate the reduction of LUNC's circulating supply, which ballooned into the trillions following the hyperinflationary death spiral of the original Terra ecosystem in May 2022. After the collapse of the algorithmic stablecoin UST and the rebrand of the original chain to Terra Classic, a grassroots community of holders, validators, and developers continued maintaining the network — with large-scale token burning emerging as its primary strategy to restore scarcity.

Proposal Passes With 96.2% Approval

The proposal received an approval rate of 96.2%, with 2.49 LUNC staked for votes. Luna Classic Node, a network validator, was among the last to announce its support, confirming its decision in a post on X:

Dear #LunaClassic Community, As circumstances change over time, our personal opinion and decisions may sometimes change as well. We have made a last-minute decision to support the proposal to increase the #LUNC Burn Tax to 1.5%. I believe this is what the majority of our… pic.twitter.com/Cc0zGm9A4H — 🌕 LunaClassicNode.com – LUNC Validator (@LunaClassicNode) August 2, 2026 https://x.com/LunaClassicNode/status/2083919397366743383

Importantly, the new tax rate does not affect trading pairs on major cryptocurrency exchanges such as Binance or KuCoin. Binance's own fee-related LUNC burns remain independent of this on-chain adjustment.

How the 1.5% Tax Is Distributed

For most exchange customers, the 1.5% fee applies only when depositing or withdrawing LUNC directly between personally owned cryptocurrency wallets. Under the existing 80/10/10 distribution split, the revised tax breakdown is approximately:

• 1.2% of LUNC burned in the transaction process
• 0.15% allocated to the Community Pool
• 0.15% allocated to the Oracle Pool

The Community Pool funds development grants and infrastructure maintenance, while the Oracle Pool supports price-feed operations critical to the chain's remaining DeFi functionality.

Price Action Forms Local Double Bottom

On the 5-minute charts, LUNC's price structure resembles a local double bottom. According to analyst Gopal, LUNC is trading within a support zone of $0.0000496 to $0.0000498. A clean break above this range could see the price move toward $0.0000510.

$LUNC / USDT 👀 $LUNC is printing a double bottom on the 5-minute chart, with buyers repeatedly defending the $0.0000496–$0.0000498 support zone. A clean breakout above the $0.0000503–$0.0000505 neckline could confirm bullish momentum 📈🔥 and open the path toward the projected… pic.twitter.com/3TqeaTdoA9 — Crypto With Gopal (@cryptowithgopal) August 3, 2026 https://x.com/cryptowithgopal/status/2084168205199946002

Broader Timeframes Show Stagnation

At the time of reporting, LUNC was trading at approximately $0.0000498, on the verge of breaking out from its local structure. However, larger timeframes paint a more subdued picture. A 2% price uptick on Monday — one day after the burn tax increase went live — was overshadowed by stagnant trading volumes and broader geopolitical uncertainty.

Meanwhile, Bitcoin (BTC) was retesting $62,000 support levels on Monday afternoon, adding further context to LUNC's price dynamics. Historically, LUNC has at times performed inversely to large-cap cryptocurrencies during bearish cycles.

Despite the community's active governance efforts, Terra Luna Classic has fallen out of the top 100 cryptocurrencies by market capitalization, prompting questions about the project's ongoing relevance in the broader crypto landscape. While the network continues to operate with decentralized governance and periodic protocol upgrades, the elevated burn tax raises the cost of on-chain activity — a trade-off the community has repeatedly accepted in favor of accelerating supply reduction.