Summary
Charge traders that trade off-chain a monthly burn tax by charging wallets containing over 100k LUNC a monthly burn tax.
Motivation
A repeg won’t happen unless most of the LUNC/UST volume is burnt.
Proposal
There have been endless discussions on how to lower the LUNC supply and REPEG UST. The truth a lot of people don’t want to hear is that the money to back up UST is gone. There is no collateral and unless majority of the supply is burned this chain won’t rise from the ashes. This is why I would like to propose the following proposal to start burning significant amounts of LUNC:
Tax every wallet with more than 100k LUNC (for the moment) a weekly/monthly burn tax anywhere from 0.5-2%. This will force exchanges to charge users a burn tax and won’t allow them to trade off-chain without paying for it. While this sort of burn tax might not be the exact same as the off-chain burn tax that was originally asked for by the community it will be the best replacement for the 1.2% burn tax, as this is specifically targeted towards the exchanges and larger holders that will be forced to charge users these taxes as a result. The argument that “if not all other exchanges do it, we won’t do it” won’t count anymore either as all exchanges have wallets with more than 100k LUNC in it. The same principal could also be applied to UST holdings.
The reason why I suggest “going after” wallets with 100k LUNC is because it is really only the exchanges that aren’t being taxed properly and this has been out of our control (for now). Especially active traders should be taxed in my opinion as this is where most of the volume is at. If you are not going to do on-chain trading and will avoid the on-chain burn tax you will have to pay otherwise! The exchanges will pass on the burn taxes to their customers. The reason for this is the fact that their wallets will be charged this burn tax every month (hot and cold wallets) and if the tax can’t be deducted automatically all future on-chain transactions from the wallet will automatically be rerouted to the burn wallet until the burn tax “debt” is paid off in full. This step if however only needed if it is technically impossible to deduct a burn tax from wallets with more than 100k LUNC.
Note: If a user decides to withdraw his funds from an exchange to his on-chain wallet and he holds less than 100k LUNC he will only be taxed on the on-chain transactions from/to the exchange. If he decides to swap LUNC on-chain and not through an exchange he will be charged a (potentially lower) fee/burn tax. This would be an incentive to move trading volume on-chain. If someone wants to sell their LUNC through an exchange they can always deposit back into the exchange but will have to pay on-chain transaction fees every time + burn tax as long as he is holding funds on the exchange (no matter the amount).
