BURN AND MINT LUNC PROPOSAL regarding the chain’s futur DEX


This proposal is a burn and mint LUNC proposal regarding the chain’s futur DEX. I believe this could potentially not only bring users to the chain but burn billions of tokens every week.


I’ve been thinking a lot about ways to bring on chain activity while accelerating the burns. Bear in mind English isn’t my first language and observations/correcting will be much needed and appreciated. This is very much in early stages in my mind but I would very much like to start an open debate between community members to develop / modify and bring more ideas to make this into an actual proposal.

Proposal idea

Part 1:

I just want to specify this would only be active when our terra station DEX goes live.
DEX on Terra station could hypothetically start with a 0.6% burning fee (or current .2% whichever) on all buy and sell transactions and increase over time (subject to change, could also be lower depending on the situation).
We will need to keep DEX fees at a reasonable minimum amount to stay competitive with CEX’s.
However, Burning fees on buy and sell transactions could be adjusted to incentivize traders and every user to trade on chain. The total amount that is burned in dollars at a given date can be used to mint new tokens 60 days later using as reference the original $ value of that burn (period to be determined - just used as an example). We’re using the $ market value from the time of original buy/sell ONLY WHEN PRICE GOES UP !! The coins that are minted are then allocated to the user that made that purchase/sell transaction. This means that if the price gets higher fewer coins will get minted/allocated than burned in every possible scenario. So the amount of tokens originally burned create new but fewer tokens using the original $ value of the burn from that original purchase ( once again, fewer coins when price goes up, in every situation more coins get destroyed). This is a win/win situation for both coin holders and traders as In this scenario we could technically also mint back the original .6% lunc amount that was burned at the time of purchasing/selling in case PRICE GOES BELOW the original purchase/sell price. This way if the price goes up we mint less than we burn - And if the price goes down we remint the coins that were originally burned in the first place - so technically there are still in every scenario not more coins being minted. The supply will go down and traders will come on chain to trade actively. LUNC « will » burn not millions but potentially hundreds of billions of tokens a year from this if we successfully incentivize people to trade on chain. Bear in mind/just want to make sure people understand the tokens that are minted will be minted two months from the time of purchase or sell (two months is just an example - not definitive). Personally I find this option to be viable as we do not penalize our users and traders with a definitive tax but we also burn billions of tokens on-chain. The tax could easily be raised to 1.2% if not much more knowing that in every scenario one gets the money from the tax burn (in original $ value) returned to them in LUNC if price goes up and the original burned lunc amount at the time of purchase if the price goes below. In other words there will never be one more coin minted that will increase the total supply. This way more coins will be burned in every possible scenario than coins being minted. This could make the deflationary nature of this token much more of a reality as billions of tokens could be destroyed every single day from this method.

Bear in mind I’m going to need help to rewrite all this out so that it makes much more sens for everyone - help is much appreciated ! :slight_smile:

2nd part very much optional - will and should be a separate proposal.

Funds sent out of terra station could hypothetically be locked for a set amount of time (perhaps a couple of days) to incentivize people to stay on-chain and accelerate the burns - especially keeping tokens safe on chain given the current climat/situation surounding exchanges. The lock up period would be reduced to 0 to send tokens to exchanges that support the burn and follow the community’s lead and vision regarding LUNC’s future. This could give great power and independence to the chain.

Wow that’s some great ideas. I hope there will be some devs to comment on the feasibility of that.

Thanks a lot ! I agree, I’d love to get feedback from devs. Hope this gets some visibility

Hi, you have an interestingly well thought out scenario and I would definitely like that kind of ecosystem for another token.

Existing investors are holding LUNC tokens for the reason that no new coins will be minted (even if we reduce the supply using your method). The production of new coins will go against the way the network is set up and I fear that this would lead to an outflow of funds, liquidation of LONG positions and a severe price crash.

From your suggestion, I understand that if I burn tokens with my transaction, I would get the same $ value in 60 days if the price rises, but less in $ if the price falls. If your suggestion goes into effect, this system needs to be set up so that the investor gets the same in both cases, otherwise we are setting up an uneven playing field.

I already wrote this in another post but I will write it here too. I believe we can help faster token burning by splitting the off-chain funds already mentioned several times into 2 halves (2M / 2M) and one half will be used by managers to open a grid on some LUNC pair. This will get our market moving, increase volume, burn more on the exchanges and ultimately create additional assets to fund the needs of the chain or buy up LUNC stocks.

Good luck with the proposal.

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I am completely against this proposal.

What I meant is the investor always gets the same $ value in the end unless price goes below that initial purchase. The tokens are minted from $ market value only is up from that initial purchase/sell. If the price goes down we only remint the burned tokens. The minted tokens can therefore never be greater than the burn that takes place.

I’m sorry, I just realized I completely missed your point. Indeed I think minting more coins is another risk we cannot take. Thank you for that feedback ! I really appreciate it as it made me rethink this.
Wouldn’t it just be possible to just simply lock the burn percentage from that purchase in a secondary intermediate pool for 60days - So NO MINTING involved !
Tokens are given back if price falls below - and $ value is given back if price rises - to be clear a percentage of locked token gets burned to reflect initial $value. This way a percentage of each transaction gets burned if price rises. Locking tokens would preserve us from using any minting and alleviate the risks involved with minting. Any help would be greatly appreciated in coming up with an updated proposal. Thanks everyone !

Don’t apologize, I didn’t respond to the substance of your post either :slight_smile:

I understand that you want your proposal to motivate investors to buy into Terra Station and thus increase on-chain volume.

Maybe in your particular case it will be better to wait until buying at Terra station is possible and at the same time when IBC is re-introduced. After a subsequent evaluation of the data, i.e. on-chain volume and volume on DEX, we will see if we need to apply some kind of incentive program for investors.

Don’t get me wrong, I don’t want to attack your proposal in any way, on the contrary, if the data shows that volume has not increased enough, I would certainly discuss it and vote for some change or incentive program.

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