Proposal Refined Edition: Discourage Static Holding, Incentivize On-Chain Activity

Proposals
1

Problem Statement
The current burn mechanism mainly costs active traders, while static holders benefit for free. In the long run, this reduces on-chain activity and harms network security and ecosystem value.

Core Principle
Tax static holding and whales — rob the rich to help the poor — without discouraging normal transactions or liquidity provision.

Specific Mechanisms

(1) Dormancy Tax (Time-Based)

  • If an address has no active operation (transfer, staking, voting, interaction) for N consecutive blocks (e.g., 30 days, TBD), a minimal daily percentage (e.g., 0.01%) of the balance is taxed.

  • Tax is sent to the community pool for subsequent distribution.

  • Any active operation resets the timer.

(2) Progressive Tax (Balance × Time)

  • Threshold examples:

    • 100k–1M USTC/LUNC: dormant >60 days → 0.02%/day

    • 1M–10M USTC/LUNC: dormant >45 days → 0.05%/day

    • 10M USTC/LUNC: dormant >30 days → 0.1%/day

  • Larger holders face higher rates or faster escalation to prevent “sleeping whales” from eroding network vitality.

(3) Exemptions

  • Staked (delegated to a validator) counts as active.

  • Providing LP without removing funds.

  • Locked in contracts (e.g., governance escrow, bridge lock).

  • Addresses below a de minimis threshold (e.g., <10k USTC/LUNC).

(4) Whitelist (No Tax)

  • Exchange accounts – Public deposit addresses provided by major CEXs, whitelisted to avoid taxing user funds.

  • Community accounts – Community pool, governance contracts, reward distribution contracts, etc.

  • Validator node operation addresses – Accounts used for block production, signing, delegation operations.

  • Whitelist additions/removals require on-chain governance approval.

(5) Tax Distribution (% of net revenue)

  • Burn

  • Community pool

  • MM2.0 (market-making module)

  • USTC staking reward pool

  • LUNC staking reward pool

  • (Ratios adjustable via governance, recommended quarterly review)

(6) Expected Effects

  • Force large static holders to either participate on-chain or bear costs.

  • Shift burn burden from active traders to long-term idle holders.

  • Reinject tax revenue into stakers and market-making – creating a positive “activity → reward” loop.

  • Maintain or increase on-chain activity, not degrade it.

2

Currently, the number of burns is decreasing and community pools are facing depletion, MM2.0、 Pledge and other expenses are required, coinage is the worst strategy, robbing the rich to help the poor is the best strategy. Although everyone’s coins are personal property and sacred, there is a limit to infringement, and in turn, it may be better to increase everyone’s value.

3

How would LUNC / USTC held on exchanges be treated, i.e. do the exchanges have to apoly for whitelisting?