In a groundbreaking proposal by @LUNCBurnProgram, the Terra Classic community is buzzing with excitement as the proposal seeks community approval to set the on-chain tax rate to a bold 1%. This move aligns with economists’ recommendations, including James Tobin, positioning it at the upper limit of the proposed 0.1% to 1% currency tax range.
Read Also: Shiba Inu Lead Developer Aims for Drastic 99.9% Token Burn, Community Reacts Positively
On-chain Tax rate increase to reasonable 1%#LUNC
Like and share if you agreeRead proposal 👇 https://t.co/H5PM3iXU1M
— Terra Luna army ™🦈 (@terra_army) December 24, 2023
The Implication of the Proposed Tax Rate
The proposed tax rate, if approved, will maintain the 80/20 split, directing 0.8% towards the burn wallet and 0.2% towards funding the chain. The primary reasoning behind this substantial change stems from the recent success of the Global LUNC Burn Program, which became the first official exchange burn partnership program following a community vote on governance proposal 11824.
As part of the Global LUNC Burn Program, exchanges can gain whitelisting if they implement a 0.5% off-chain burn tax on LUNC and USTC sell trades. The program, detailed in a whitepaper by Ninja and LUNCPeace, highlights the potential for a 2750% higher burn rate through off-chain (spot trade) burns compared to on-chain tax.
The team from @LUNCBurnProgram has initiated direct communication with various exchanges regarding the #GlobalLUNCBurnProgram, with a tier 1 exchange expressing interest, contingent on participation from others. The proposed 1% on-chain tax rate aims to provide additional leverage during negotiations with exchanges, increasing the incentive for wallet whitelisting and spot trade burns.
Read Also: Google’s AI Predicts Positive Trajectory for XRP in 2024, Anticipating $5 Price Target
The On-chain and off-chain tax rates
The proposal emphasizes the independence of on-chain and off-chain tax rates, noting that they don’t need to be the same. The proposed change comes after feedback from exchanges suggesting that a higher on-chain tax policy would be a more significant incentive for participation in the program.
Several compelling reasons support the move to a 1% tax rate. First, it enhances negotiating leverage with exchanges, driving higher participation in the Global LUNC Burn Program. Second, it addresses the technical development challenge, as the tax rate doesn’t impact utility from a technical perspective. Third, it bridges the divide within the community, offering a middle ground between supporters of the current 0.5% tax rate and those advocating for a 1.5% rate.
Lastly, the proposal highlights that the increased tax rate will result in a higher burn rate during periods of high on-chain activity. The Tax2Gas initiative is set to adopt the 1% tax rate upon completion, showcasing the community’s commitment to driving growth, partnerships, and value for Terra Classic. The proposal reflects a strategic and forward-thinking approach to governance, aligning with the project’s long-term vision and goals.
Â
Follow us on Twitter, Facebook, Telegram, and Google News.