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The Proposal 5234 has been in discussion these days in the Terra Classic community after Binance CEO “CZ” recommends lesser fees to increase Terra Classic (LUNC) burn rate. The community member Akujiro proposes to reduce the burn tax to 0.2% and set 10% to finance Terra Classic ecosystem infrastructure and contributors. The group behind the 1.2% tax burn and Terra Classic revival roadmap supports Proposal 5234.
Terra Rebels Support Proposal 5234 to Reduce the 1.2% Tax Burn
Terra Rebels, the volunteer developer group behind the 1.2% tax burn, currently seeks the opinion of the Terra Classic community on the proposal. Meanwhile, Terra Rebels lead developers Edward Kim and Alex Foreshaw have expressed support for the Proposal 5234.
Edward Kim, co-author of the 1.2% tax burn proposal, in a tweet on October 15 revealed that after a detailed analysis he voted “yes” to the proposal. In a Medium article, he explained the impact of reducing the tax to 0.2% and allocating 10% of funds to the community pool for Terra Classic chain developments.
He believes the community pool can be used for emergency funds, attracting DApps and projects back to the Terra Classic chain, and paying back developers to improve the chain.
Currently, the tax parameter burns 100% after each epoch, which is 7 days for LUNC. At the end of each epoch, all burned LUNC are re-minted and burned immediately. It means setting 0.9 and 90% burn by the new proposal will actually function as a 100% burn during the week and re-mint 10% of burn.
Furthermore, he uses machine learning optimization to drive his decision on reducing tax burn to 0.2%. He thinks some projects or DApps have certainly moved away from LUNC due to the on-chain tax, but most have supported the on-chain tax. It is better to keep exploring as there is not enough data supporting a 0.2% tax will increase trading volume.
Whereas, Alex Foreshaw accidentally voted “No” to the tax change proposal, before revealing that a lower tax rate combined with CosmWasm upgrade will improve on-chain liquidity. It will also make DApps build on Terra Classic and restore lost LUNC trading volumes.
Meanwhile, validators and other members seem to support the proposal based on Binance CEO “CZ” recommendation to reduce fees.
LUNC Price and Burn
Terra Classic price mostly increased after the 1.2% tax burn, staking, and other governance activities. Also, Binance has played an important role in increasing the burn rate with its LUNC trading fee burn decision.
At the time of writing, the LUNC price is trading at $0.00027, down over 3% in the last 24 hours. Trading volume is down 50% due to the market-wide unfavorable sentiment of traders.
Until now, over 19 billion LUNC tokens are burned in total. Also, the tax burn accounts for 6 billion LUNC, whereas the burn address accounts for 13 billion LUNC tokens.
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