In concordance with Prop 44 “Burn all Seigniorage,” we’re proposing to initiate the burn of 88,675,000 LUNA from the Community Pool to mint 3 - 4 billion UST – contingent on the LUNA price at the time of the swaps iterated below. This will reduce the total supply of LUNA by 88,675,000.
Since the LUNA price and amount in the Community Pool has changed drastically since Prop 44, the resultant UST minted from the burn will go to the Community Pool, with the community deciding how much to deploy to bootstrap Ozone via a separate proposal once Ozone goes live. (Initially, the plan signaled in prop 44 was to use $1 billion to bootstrap Ozone)
This proposal will also leave 10 million LUNA in the Community Pool.
Due to the changes implemented in Col-5, where all on-chain stablecoin swap fees are routed to the oracle_rewards_pool for validators, TFL predicts that LUNA staking rewards (minus airdrops) will likely increase to above 10% after the burns have been completed.
The Execution Plan
TFL to Initiate a CommunityPoolSpend Proposal to withdraw 88,675,000 Community Pool LUNA to the designated address: terra10kjnhhsgm4jfakr85673and3aw2y4a03598e0m, a wallet dedicated to performing swaps for this particular transaction. This proposal will be submitted on Wednesday night KST, and will be in voting period for two weeks thereafter.
Swap all LUNA at the above address to UST over two weeks, initiating LUNA <> UST swaps every 800th block, equating to 520,000 LUNA minted to the equivalent UST every swap/800th block.
Return all UST generated from the swaps back into the Community Pool.
Following the initiation of the above, a separate, new proposal will go live once Ozone launches to fund it using the proceeds from the mint/burn of the 88,675,000 LUNA → UST at the discretion of future governance proposals by the community.
Please allow for open discussion on the proposal in the comments below.
An on-chain vote for this proposal will be initiated in 48 hours.
I understand how much we all love to burn LUNA, but is there any reason as to why we will be burning so much? Wouldn’t it be better to just burn what is needed for Ozone’s bootstrapping (1B $UST ~ 23 million LUNA at current prices) and leaving the rest as LUNA, an asset which is expected to appreciated in price?
As LUNAtics, we all want to do what’s best for Terra, and to do that, we should want to get the most out of our community pool, and I just don’t see the benefits in burning an extra 65 million LUNA from the community pool, and then leaving the UST in the community pool.
If we don’t burn this extra 65 million LUNA, and LUNA’s price were to appreciate to $100, the community pool will have an extra $3.7 billion.
It is easier to calculate how much money, that we are able to spend, when it is in stablecoins. What if Lunas price goes to 10? Having something stable in crypto is quite nice. They are also leaving 10 million, which could turn into a lot of money, just a lot let exposure, but more security. Just my thoughts
I think at some point, it may be just prudent to burn the UST in the community pool entirely. There’s just too much wealth there, and at some point this will prove to be a liability for the whole ecosystem. Why engage in entrepreneurial activities when you can just ask for a grant from the community pool? Who holds you accountable then?
But also this - i think at this stage of Terra, where the grant framework has been reduced to fund public goods on the Terra network, it makes more sense to pay service providers in stablecoin rather than Luna.
Hey everyone hope you are doing well. My suggestion is to burn around 4 billion UST worth of luna with 2 billion used for bootstrapping Ozone and the remaining 2 billion stored at bay in the community pool (that may be put to good use; for future projects, converted to FX reserves to stabilise the peg, replenishing anchor’s yield reserve or whatever it may be). 3 billion used for funding ozone and the rest kept at the community pool is also fine with me. 4 billion just seems too much imo. But what do i know im just a normie lmao.
You are playing with numbers in a spreadsheet however here I think we should deal with the status quo. No one can predict the future pricing of financial assets. The Terra ecosystem is at a point to survive even a crypto winter like 2018/2019 (even though I dont think one is coming anymore - too much institutional adoption) and build during that time great applications and tech. Therefore it would be very nice to have some idle funds in stable to pay for RD, development etc. Having said that, it acts a little bit like a baseline / backstop for the terra ecosystem to survive even hard shocks. I think this is a valuable proposal for the long term growth and benefit of our ecosystem. Thanks for the work and the proposal
I recognise the value in burning a large share of the Community Pool. Locking in several billion dollars of funding for insurance and community projects is sound risk management for such a vital community resource.
However, this proposal burns nearly 90% of the LUNA in the Community Pool. I echo the sentiments of others who believe that we may come to regret burning such a large share of the pool, particularly as we have no need for it at this moment.
My preference would be to burn a slightly smaller share, perhaps 80%. Doing so, we would still broadly achieve the aims of Do’s proposal while roughly doubling the community’s investment in LUNA. It’s a small change that could have a big impact.
And if the price of that LUNA plummets in another crypto winter? Well, we’d still have several billion UST to see us through.
I’d prefer to max out the full contribution towards bootstrapping Ozone. A monster insurance protocol backing the Terra ecosystem will make it easier to attract capital into the ecosystem
I believe that 88M Luna from the Community Fund is a lot of money to be burned at once. On the other side, I am wondering if part of the Luna from the community fund can be used as incentives for Terra network to attract more users especially with the launch of 100+ new projects.
If 15-20M Luna were used as incentives to support local projects and/or projects moving from other networks was announced, the price of Luna can appreciate in price and burning 1-2B $UST might only require selling a smaller number from the community pool.
20M Luna as incentives at current prices = 900M
Second highest after BNB (1b). Assuming prices increase by 50% after the announcement, burning 30M Luna will yield = 2B UST. Luna community fund will have 48M Luna tokens worth 3.24B.
Guys you need to think out of the box. The LUNA ecosystem is just starting, And I think it makes total sense to burn those funds for bootstrapping and in return it will bring more liquidity to the ecosystem. It’s an investment, so you need to invest more money… Take an example from Binance they just pushed 1Billion into BSC… AVAX, ALGO they all push funds into the ecosystem and the prices rallied. So we should do the same for LUNA ecosystem especially now with the arrival at IBC…
Is the Comm Pool currently held by the TFL wallet, I can’t see a large wallet address otherwise (unless multiple)?
Is some or all of the comm pool currently staked? Otherwise I can’t see how the fees from the burn are going to 5x staking rewards, as it’s spread over so many staked Luna. Unless something else happening and that also prices in growth elsewhere etc.
Keeping a stablecoin available for grants also makes sense because grant applications can request for dollar denominated amounts and not be subject to receiving too much or too little money if there is volatility up or down from the time the proposal was written to the time the money was disbursed.
I’d go as far as saying that it should be considered to have proposals request only UST denominated amounts, not LUNA.
TY v much for reply, but even 25% swap fee would be say a billion UST, over 3 years with 344m staked is only $1/annum per Luna.
I’m sure I must be missing something just wondered if comm pool was staked so staking rewards paid over fewer, can’t otherwise see how the jump in staking rewards going to be as significant?
