Gamza Khanzadaev
LUNC initiates big changes in burning process and infrastructure development
The Terra community has voted in favor of a proposal to reduce the LUNC burn tax to 0.2%. Additionally, the community has taken the positive action of allocating 10% of tax revenue to fund ecosystem development and payments to contributors. A vote in favor of the relevant proposal garnered the necessary 75% vote in LUNA tokens.
There were several reasons for such an initiative. The decision follows a significant 91.67% drop in on-chain transaction volume after the initial burn tax was implemented. In addition, there were concerns that stakers and LUNC spot holders would be excluded from the cryptocurrency burning process through the tax and only contribute by sending them directly to “dead” addresses. Additionally, a tax burn as it now exists would need to work for 20-60 years to bring LUNC’s supply to the desired supply of 10 billion.
Main reason for the tax reduction
The main reason, however, is the zero use of tax revenue. According to the proposal, the number of LUNC burns does not justify the cost of the implementation, carried out for free by Terra enthusiasts. The new proposal, on the other hand, involves a withdrawal of 10% of tax revenue to pay for infrastructure development and incentives for contributors.
Now that the vote has passed, it remains to be seen how the centralized exchanges that introduced the tax will react. LUNC cost has not reacted to the event so far.
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