Reducing the LUNC Tax Rate from 0.5% to 0.35%

Proposals
1

This whitepaper proposes a modification to the Terra Classic on-chain transaction tax, reducing the total tax rate from 0.5% to 0.35%, while rebalancing the allocation away from excessive burns and toward network sustainability, liquidity, and staking rewards.

The proposal aligns incentives with Terra Classic’s Proof-of-Stake (PoS) security model and addresses the long-term inefficiencies of aggressive token burning.

Current Tax Structure (0.5%)

Allocation Rate

Burn 0.40%

Oracle Pool 0.05%

Community Pool 0.05%

Total 0.50%

Proposed New Tax Structure (0.35%)

Allocation Rate

Burn 0.05%

Oracle Pool 0.15%

Community Pool 0.15%

Total 0.35%

Motivation for Change

1. Over-Burning Does Not Guarantee Price Appreciation

While token burning reduces supply, it does not automatically increase price.

Price is determined by demand, utility, liquidity, and velocity, not supply reduction alone.

If demand does not increase, burning simply destroys market capitalization rather than creating value.

Excessive burns:

• Remove capital from the ecosystem permanently

• Reduce available liquidity

• Limit growth of on-chain applications

• Discourage large transactions due to high friction

2. Terra Classic Is a Proof-of-Stake Blockchain

As a PoS network, Terra Classic relies on:

• Validator incentives

• Delegator rewards

• Reliable oracle operations

• Sustainable security funding

Underfunding staking rewards directly weakens network security and decentralization.

Increasing oracle and community funding:

• Improves validator participation

• Strengthens consensus reliability

• Encourages long-term staking rather than speculation

3. Liquidity Is More Important Than Burns

On-chain liquidity enables:

• Tighter spreads

• Lower slippage

• Higher trading volume

• More DApps and integrations

By redirecting tax revenue:

• More funds are available for DEX liquidity bootstrapping

• Community Pool can support:

• Liquidity incentives

• Grants

• Ecosystem growth programs

• Infrastructure development

Liquidity creates real economic gravity, while burns only reduce numbers.

4. Lower Tax = Higher On-Chain Volume

Reducing the tax rate from 0.5% → 0.35%:

• Lowers transaction friction

• Encourages arbitrage and trading

• Increases user activity

• Improves competitiveness vs other chains

Higher volume at a lower tax rate can:

• Generate more total revenue

• Increase real usage

• Strengthen LUNC’s economic relevance

5. Maintaining Binance Alignment

Reducing the burn portion to 0.05%:

• Matches Binance’s burn philosophy

• Maintains exchange alignment and goodwill

• Preserves symbolic deflation without sacrificing growth

Burns remain present, but no longer dominate economic policy.

Economic Impact Analysis

Short-Term Effects

• Increased trading activity

• Improved liquidity depth

• More attractive environment for builders

Medium-Term Effects

• Higher staking participation

• Stronger validator set

• Sustainable oracle funding

Long-Term Effects

• Network security reinforcement

• Ecosystem expansion

• Organic demand growth

• Price appreciation driven by utility, not artificial scarcity

Addressing Common Concerns

“Burns Are the Only Way to Raise Price”

This assumption ignores market mechanics.

Historically, networks grow through adoption, not destruction of capital.

Burns without demand:

• Reduce circulating supply

• Reduce total value locked

• Do not create buyers

“Lower Tax Means Less Revenue”

Not necessarily.

Lower friction often results in higher transaction volume, which can increase net tax revenue.

Governance & Implementation

• This proposal requires a standard governance vote

• No protocol-level complexity

• Pure parameter adjustment

• Fully reversible if needed

Conclusion

This proposal shifts Terra Classic from a burn-maximalist strategy to a growth-first, PoS-aligned economic model.

By:

• Reducing total tax

• Preserving symbolic burns

Whitepaper by: Nicolas Boulay Luncverse Validator and you friendly neighborhood Cookie DO coin

2

Agree with this completely… Let’s do it

3

“Conclusion: A Definite Answer

The burn tax is currently negative for Terra Classic overall.

While it theoretically reduces supply and aligns with the community’s desire for token scarcity, its practical implementation harms transaction volume, investor profitability, developer interest, and community sentiment. Unless the Terra Classic ecosystem evolves to offset these negative effects with increased utility and user adoption, the burn tax will continue to hinder progress rather than foster growth.

Ultimately, the burn tax must be part of a larger, well-rounded strategy—not the sole mechanism relied upon to drive value.”

Embrace the Chaos.

1 Like
5

This proposal lowers tax from 0.5% → 0.35%, reduces burn allocation, and redirects funds into staking rewards, community pool, and oracle funding to support liquidity, security, and development.
Good for long-term sustainability, bad for max burn speed.
Vote depends on what outcome you prioritize.

2. PRO-Vote Argument (supporting the proposal)

This isn’t a pump tactic — it’s a restructuring of our economic engine.
Burns alone haven’t pushed price because price follows demand, not destruction.

This tax change:

:check_mark: Reduces friction → increases volume
:check_mark: Boosts staking rewards → strengthens PoS security
:check_mark: Funds builders, dApps & liquidity programs
:check_mark: Brings long-term growth over short-term hype
:check_mark: Aligns with Binance burn allocation
:check_mark: Moves us from burn-only chain → utility-capable chain

LUNC can’t rebuild by only burning — we need liquidity, development, and real usage.
This proposal provides fuel for adoption instead of burning everything as smoke.

Burns stay alive, just balanced instead of dominating.
This is smart economics, not hype economics.

YES for long-term sustainability and ecosystem growth.

3. AGAINST-Vote Argument (opposing the proposal)

Burn reduction is huge — from 80% of tax → just 14%.
Anyone focused on burning supply fast may see this as too much of a step back.

Concerns include:

:red_exclamation_mark: Slower supply reduction
:red_exclamation_mark: Price may move slower short term
:red_exclamation_mark: Development spending might be mismanaged
:red_exclamation_mark: Requires trust that funds will be used productively
:red_exclamation_mark: Burns motivate holders psychologically — reducing them weakens narrative

This proposal favors slow sustainable growth, not aggressive burn-driven deflation.

If your priority is removing zeros quickly, this proposal does not move toward that model.

A NO voter could argue:

“Keep burns high until supply is lower — shift toward utility later.”

4. Balanced Compromise Revision (Best of both worlds)

Below is an improved middle-ground allocation model if the goal is to increase sustainability without nearly wiping out burns.

Original tax: 0.5%
Proposal tax: 0.35% (Burn 0.05%)

Balanced Alternative Option:

Pool Allocation
Burn 0.15%
Oracle Pool 0.10%
Community Pool 0.10%
Total 0.35%

Changes vs original proposal:

:small_blue_diamond: Burns stay meaningful (30–40% of tax, not 14%)
:small_blue_diamond: Still reduces tax to boost volume
:small_blue_diamond: Still increases funding for development & staking
:small_blue_diamond: More comfortable for burn-focused holders
:small_blue_diamond: More politically passable in governance voting

support network health funding, but burns shouldn’t be nearly eliminated.

Here’s a balanced roadmap: reduce tax to grow volume AND maintain stronger burns.
This way both sustainability and deflation advance together.”*

This version respects both sides:

:fire: Burn believers
:brain: Economic realists
:gear: Builders and validators

Final Combined Conclusion

Vote Reason Summary
YES Sustainability, liquidity, development, staking, long-term growth
NO Slows burns significantly, reduces deflation narrative
Best Future A balanced model keeping burns meaningful + funding growth

This proposal is smart for long-term recovery, but adoption depends on aligning it with community burn expectations.

6

unreadable AI-slop everywhere :-1:

1 Like
7

The idea, conception, distribution and issues raised and problems solved all come from me. one would be stupid to work harder and not smarter but please keep bringing this fantastic positive criticism!

2 Likes
8

There is no definition of ‘over burning’ and i suspect that LUNC is the last chain that could suffer from burning too much LUNC.

9

Totally agree, anything appearing AI generated should be removed from a ‘community forum for humans’

1 Like
10

The tax should be ZERO at this point and we should be relying on builders to diminsh supply.

1 Like
11

ZERO TAX:

  1. say good-bye to Binance burns - the only catalyst we have now. Not to speak of the marketing opportunity. + the Binance ←> Bitkub wallet transactions are not whitelisted, and are responsible for majority of burns as well.

  2. The chain will ‘die’ much faster since the burn tax proceeds are the only thing keeping CP + ORP alive.

12

This is a step in the right direction that gets my support. My target would be .1%. Our focus should be on competing with other blockchains, not navel-gazing, just focused on burns, which will take decades to have any impact.

13

Removing a burn tax right now would be like taking away a wheelchair from a handicapped person and expecting them to compete in 110-metre hurdles.

14

That’s a pretty good analogy of today’s scenario. Taking away a wheelchair from a handicapped person and expecting them to compete in 110-metre hurdles, they would fail eitherway.

16

I’ve reviewed the whitepaper by Nicolas Boulay regarding the tax rebalancing from 0.5% to 0.35%. This is a mature and necessary step for Terra Classic’s long-term sustainability.

From Burn-Maximalism to Growth: Burning supply is a tool, not a complete strategy. Without utility and liquidity, burning simply destroys market cap. This proposal correctly identifies that liquidity and demand are the real drivers of price.

Reinforcing Network Security: As a PoS chain, our priority must be validator and delegator incentives. Increasing the Oracle Pool allocation to 0.15% directly strengthens the security and decentralization of the network.

Encouraging On-Chain Volume: High transaction taxes act as a barrier. Reducing the total tax to 0.35% makes LUNC more competitive for arbitrage, trading, and dApp integrations, which will ultimately increase net revenue.

Exchange Alignment: Moving the burn portion to 0.05% maintains our symbolic deflationary nature while aligning with Binance’s established philosophy.

This is a shift from ‘burning the furniture’ to ‘building the house.’ I fully support this rebalancing toward a growth-first economic model.

1 Like