Hi @arunadaybasu, my point in my plan is to exempt dapps from on-chain tax so they won’t be harshly effected by our raising of the on-chain tax.
My proposal here states that the proposal from @dfunk should be implemented to this end:
And from the prior thread https://classic-agora.terra.money/t/vision-plan-to-achieve-1-lunc/50412:
We can start there and look at what else is suitable, subject to governance.
The exemption only applies to sending to participating exchange hot wallets who adopt the 1.2% burn tax off-chain. That means we lose that on-chain volume. But we still have withdrawals from them, and ordinary other on-chain transactions. As I said in my prior post, it’s worth it for us overall to offer that deposit exemption.
Swaps within Terra Station wallet using the two DEX’s should have the 1.5% on-chain tax. If they swap from LUNC to USTC it’s a 1.5% tax. If they instead wanted to bypass this and send the LUNC to exchange to sell, they incur 1.2% burn tax fee. Then convert USDT to USTC (0.1% exchange fee). But if they don’t want to hold USTC on an exchange, and want to send back to their wallet, it will cost them 1.5% to send back the USTC. So now they’re at 2.8% tax versus just 1.5% if they stayed within the wallet. If they’re okay holding USTC on exchange it’s cheaper to swap by sending LUNC there and swap to USTC, they incur 1.3% tax instead of 1.5%, so cheaper by only 0.2%. It’s also more inconvenient to leave the wallet for swaps. There may be some volume loss there on DEX’s but it’s not likely to be much for the reasons I stated.
Overall we are looking to achieve the 1.2% burn tax off-chain. This is the whole point of the plan. If this succeeds then amazing. If we can’t succeed in 6 months we can roll back the tax changes. It’s an attempt to secure the goal of significant off-chain burns. Getting worried about possible on-chain volume losses is something to consider, but not the main point, and actually we will actually get massive on-chain volumes if we succeed in the off-chain burns (as I said, LUNC on-chain volume goes way up when LUNC pumps). You can’t say on-chain volume will be lower, because if off-chain 1.2% burn tax is successfully implemented, LUNC price will skyrocket and we will see a big boost in on-chain volume. Before then, while we have the 1.5% on-chain tax and are still pursuing off-chain burns, there is no deposit exemption in place yet. That only comes when exchanges agree.