In recognition of both Text proposal 11243 and Parameter change proposal 11242 passing, as well as LUNC’s integration into Station repo, I propose that the LUNC community now consider all marketing strategies to increase on chain volume. An increase in on chain volume will not only serve to rapidly bootstrap both the oracle rewards and community pools, but it could also further improve chain security by tying-up more coins in staking, as we work towards an even higher Nakamato coefficient.
To that end, this agora asks the community to consider the idea of burning 250 mill LUNC from the community pool, as a Community spend proposal. Until further notice, this agora also suggests that we continue to put forward community spend proposal burns on a monthly basis, always ensuring we leave a minimum of 750 mill LUNC in the community pool.
At the time of writing this agora (11/01/23) the community pool currently stands at 1.042 Bill LUNC, that is why 250 mill LUNC has been put forward as a burn amount. Should this agora attract interest, one of the topics of conversation should be on the amount we burn and at what frequency.
As alluded to above, this proposal is a promotional tool to attract volume, by posting a voted on, predictable, large burn, with the aim of stimulating buy pressure. To that end, this agora suggests that the community pool moves to a, “just in time” funding model, whereby we only ever leave a max of 750 mill LUNC in it at the end of the month, as an emergency fund. The caveat to maintaining this as a marketing strategy is that should any development team put forward an agora post, or proposal before the monthly Community pool spend proposal for the burn is considered, that proposal would take funding precedence.
Positives of a monthly burn of Community pool down to a min of 750 mill LUNC
• May stimulate buying pressure for LUNC, leading to more volume
• Permanently burns the coins, no questions about how the funds are allocated
• Makes development teams consider their costs more stringently (LUNA 2.0 is a good example of how community pool funding for project funding does also have drawbacks)
• It would be the first official, on chain, mass community burn. Essentially, it is a similar model to what Binance and Validators are doing; burning a portion of their fees/commission
• If successful, could potentially be used as evidence to reduce/remove the burn tax. Of course, this is not preferable, as the burn tax has massive support from the community, but this is a different way of burning
• Could create FOMO like events once a month (depending on the size of the burn being voted on), keeping LUNC’s name in the public domain
• Using community pool spend proposals to fund projects can obviously lead to coin sell pressure (again, this is something LUNA 2.0 experienced recently)
• Makes more sense as a promotional tool now we have increased gas fees, removed seigniorage and restructured the way gas fees are allocated.
• Luncblaze.com have also now have included a feature that allows the user to allocate a portion of their burn to either the community or oracle reward pools. As such, having a community pool burn once a month may encourage burners to allocate more of their burn to the community pool
• This does not have to be a permanent burning strategy and can simply be stopped by not posting a community pool spend proposal for any given month
• It’s a more agile approach to burning down the supply
• We can try to get the community pool burn listed on luncpenguins.com to try and spin up competition, striving to make community pool burns the number one burner of coins
• Bigger burns have coincided with a higher price of LUNC previously
Negatives of a monthly burn of Community pool down to a min of 750 mill LUNC
• May not increase volume, or only increase volume off chain. To that end, it may not act as promotional tool to rapidly bootstrap the oracle rewards and community pools
• May leave us short of funding in the short term, if a few community pool spend proposals are put forward at the beginning of the month
• May not attract as much interest from developers if funds are not clearly available
• May have little impact on anything because of market sentiment
• May lead to many scam community pool spend proposals being put forward, or a lot of the community putting up community pool spend proposals to burn coins, not understanding the need to have coins available in the community pool.
Burning coins from the community pool is not an ideal strategy. However, the purpose of putting forward this agora now is because there are not many protocols or modules that are clearly being developed on LUNC. Quite a few of our NFT projects and development teams have amassed a large wallet of coins because of the lower price of LUNC, so if the price were to increase, those holdings would be worth more. LUNC’s integration into Station repo is obviously another huge milestone for the chain, which in itself could lead to increased on chain volume, given that we still have reasonably cheap gas fees. In short, this feels like a good time to implement this strategy as a promotional tool for LUNC
The whole 250 mill LUNC will be sent to terra1sk06e3dyexuq4shw77y3dsv480xv42mq73anxu (minus gas fees and tax)