Terra Classic Transaction Tax Allocation Proposal
0.5% Sustainable Infrastructure Funding Model
This proposal introduces a revised 0.5% on-chain transaction tax split for Terra Classic (LUNC), structured to support long-term network sustainability through controlled deflation, strategic liquidity provision, and stabilization of oracle staking rewards.
The allocation prioritizes productive capital use over passive accumulation, ensuring that network fees directly reinforce market depth, oracle pool funds (staking rewards) , and community pool funds for development, audits, liquidity, upgrades, dev teams, marketing, legal representation and more.
Todays Allocation Rate
Burn 0.40%
Oracle Pool 0.05%
Community Pool 0.05%
Total 0.50%
WE BURN 80% OF OUR CHAINS ONLY INCOME!!
- 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
- 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 and will result in the chains death. no investors will stake their lunch if they earn 3% apr which is what you will get in 6 months. in 1 year if no changes are made, your APR will be lower than 1%.
Increasing oracle and community funding:
• Improves staking rewards
• Strengthens consensus reliability
• Encourages long-term growth by having funds to build utility (like a dex for example)
- 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
• Community Pool can support:
• Liquidity incentives
• collateral growth for collateralized stable coins
• Ecosystem growth programs and marketing
• Infrastructure development
Liquidity creates real economic gravity and marketcap growth
- Tax Structure Overview
Total active Tax: 0.5%
Suggested tax split Rate
Burn
0.10%
Community Pool
0.20%
Oracle Pool
0.20%
- Burn Allocation (0.10% 2X Binance
)
The burn component provides continuous, usage-based supply reduction without imposing excessive transaction friction. This ensures deflation remains proportional to real economic activity and does not suppress on-chain volume. Mo fear of losing Finances support as we will still be burning 2X of their allocated % to burn.
All burned LUNC is permanently removed from circulation.
- Community Pool Allocation (0.20%)
The Community Pool allocation is designated primarily for liquidity provision, market support, infrastructure growth, upgrades, audits, collateral growth and funding marketing and legal teams.
Primary Objectives
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Grow deep liquidity on approved DEXs
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Reduce volatility and slippage for on-chain trading to bring in larger trades and raise volume
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Support repeg-adjacent and price-stability initiatives
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Strengthen LUNC Ecosystem with sound financial structure
Governance Control
All liquidity deployments remain subject to:
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On-chain governance approval
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Transparent accounting
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Revocability if market conditions change
This approach converts transaction fees into productive on-chain capital, rather than idle reserves.
- Oracle Pool Allocation (0.20%)
Oracle staking rewards are currently depleting at an unsustainable rate, posing a direct risk to price accuracy and network security.
The Oracle Pool allocation establishes a dedicated, non-inflationary funding stream for oracle incentives.
Intended Use
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Supplement and stabilize oracle staking rewards
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Maintain competitive validator participation
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Reduce reliance on diminishing reserve balances
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Improve resilience against stale pricing and oracle drop-off
This ensures oracle services remain reliable without resorting to token minting or emergency interventions.
- Economic Rationale
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Low tax, high efficiency: 0.5% preserves transaction competitiveness.
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Net deflation: Burns remain permanent and usage-driven.
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Capital productivity: Fees reinforce liquidity and infrastructure directly.
- Governance & Implementation
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Enacted via standard on-chain governance proposal
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Enforced at protocol level
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All flows remain fully auditable and transparent
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Allocation ratios adjustable through future governance if required
- Conclusion
This tax allocation model strengthens Terra Classic by:
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Maintaining measured deflation (0.10% burns)
-
Actively supporting market liquidity
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Preventing oracle reward exhaustion
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Eliminating the need for inflationary fixes
It aligns transaction fees with the network’s most immediate structural needs while preserving long-term flexibility without fancy tax changes allowing the MM2.0 team to keep their work going while focusing on sustainability and revenue growth of the chain, collateralization and repeg of our 22 native stable coins without risks or lack of liquidity.
Signed,
Nicolas Boulay , Luncverse Validator and you friendly neighborhood Cookie DO