Killing the Tax - Proposal for 0% Burn tax Parameter change

Governance & Proposals
1

Summary
Since tax implementation on 21st of Sept, we are experiencing a sharp and constant decline of the number of transaction, reducing off-chain utility and generating a lot of bug to be fixed by Terra Rebels team, delaying other more viable solution.
By reducing the tax to 0% we would acknoledge that the Tax is not working and that our community as a whole can learn from its mistake.

Motivation
As Ed stated, « The good thing about this tax is that it unified the community ».

Truth is, us as a community were wrong, and let’s face it : Its not because we are thousand to think the same thing that it is a good thing.

Burn tax is failing the chain, and we are now at a cross road :

  • Either we keep witnessing the utility of our dear chain vanish, the value of the coin diminish and the time of our Fearless TerraRebel’s developers wasted to fix a tax that won’t work anyway.

  • Or we take our loss, once more, one last time and say we were wrong.

This proposal serve this goal. End the burn tax, asap.

Being wrong once is ok, as long as we learn & evolve. We now know that the only way forward is protecting utility of the chain, and take accountability. The tax is not working.

Some data :

Capture d’écran 2022-09-26 à 09.14.16
Capture d’écran 2022-09-26 à 09.14.161664×952 63.9 KB

Repegging USTC will. Lets put all our strenght in this battle and focus all our dev effort to the repeg, right here, right now. Let’s show the world, $lunc governance is reasonable.

2023 will be our year. Let’s chin up, and move forward.

Proposal
Proceed to a Parameter change proposal modifying the Tax rate to 0.

here are the Parameters to be changed :

{
  "subspace": "treasury",
  "key": "TaxPolicy",
  "value": "{"rate_min": "0.000", "rate_max": "0.000", "cap":{"denom": "usdr", "amount": "60000000000000000" }, "change_rate_max": "0.0"}"
}
{
  "subspace": "treasury",
  "key": "RewardPolicy",
  "value": "{"rate_min": "0.0", "rate_max": "0.0", "cap":{"denom": "unused", "amount": "0" }, "change_rate_max": "0.0"}"
}
1 Like
2

I second this proposal.

Killing the tax will allow old utility to come back. Numerous projects have said coming back is unfeasible due to the cost of reworking the current system to be compatible with the new tax. See dApp problems in the last week.

TR have had a stoic attempt at fixing it but it’s time to focus on repeg. The burn mechanism can burn trillions in weeks. It can burn quicker than any tax AND will bring utility itself and dApp utility.

The burn tax has failed. We need to move forward

2 Likes
3

Let us make a new Token and call it RESERVE Token. In this Token we need to maintain 70 percent of all luna token supply. This way even if people panic to sell their luna. The 70 percent was still there. Which will make this reppeg a bit better from any attack. No one can withdraw easily from this RESERVE token. It must be by airdrop only in monthly basis.

4

I agree… network usage are the real blockchain values… not token burn…

Luna Blockchain is not about the token… it’s about associated financial products like ANC, MIR, etc…

1.2% tax reduce the transactions / network usage, eventually LUNC will become safemoon…

3 Likes
5

I strongly support this proposal
I would also support a .2% on LUNC (political concession to the burn movement; LUNA/UST swap had a .5% minimum tax on UST->LUNA, which was where a lot of trading volume was) and 0% on USTC → anything else
Stablecoins are way too competitive of an industry to be burdened with additional taxes IMO

1 Like
6

Maybe not disable the tax as a whole but lowering it would be enough to make the chain viable to build on. Say like 0.1 or 0.2 nobody would mind a fee as low as this.

1 Like
7

PR 4793, 4661, 3568 all passed with historic percentages voting YES for the burn. Two PRs at 99%+ Yes votes. Maybe you here are all posting on the wrong forum? LUNA2 is here >>

8

The volume is pershap killed mostly due to binance high fee for transfert he keep in hostage the lunc there with 102k transfert fee and some mess up between Cex and terra plus the IBC still closed, add to this the lack of utility, the mass movement and use on blockchain was to prep for the burn tax, its normal it slow down after since what caused the big part of the move was the tax itself.

2 Likes
9

The fact that there will be a reduction in the volume of transactions on the blockchain after the introduction of the burning tax was expected. Transaction volume rises and falls over time, as does the market price.
The introduction of the burning tax is a long-term plan for the revitalization of #LUNC and I personally don’t think that after some 6 days since its introduction we can objectively say that its use is negative for this blockchain.

5 Likes
11

The market was already in a downward correction when the keys in the parameter for the on-chain burn tax started. It also had an upward trend in volume and price for about 4 hours hours before the Binance announcement (and then a large volume and price increase after that announcement).

You would need a much larger dataset before stating that the on-chain burn is not working (ie. not working meaning the burn of supply, and the positive increase in demand as a result, is not overall beneficial given other aspects that would outweigh).

Generally taxing can have negative effects, but when it meets the following criteria it can have a positive effect:

  • When a tax is low (it was already reduced from 3% to 1.2% between when it was first proposed and then in its second proposal)

  • When a tax has a direct purpose and accountability (and therefore has a benefit - in this case reduces supply and thereby will have a positive effect on demand)

  • When a tax has broad support (will not be avoided - in this case avoidance would be moving to a different chain, avoiding contract execution, avoiding swapping, or not developing new dApps or continuing current dApps and services)

Outside of these situations, taxes can become counter productive and actually do the opposite of what they are intended to do (explained in first link, more in depth in the second link).

In this situation though I think any country (referring to the macro economic system Terra v1 is built upon) would love to have their citizens throw their support to pay a tax with 99.88% of people voting to support that tax (that does not look like people plan on avoiding the tax to me, at least currently, and probably will still maintain broad support to the degree it provides a benefit of reduction in supply and to the degree that benefit is felt greater than the cost, and retains broad support).

12

Surely you are one of those who does not want Luna to return to the top. I will veto this ridiculousness.
The graphs are failing and the trackers are not able to display the data accurately.

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5 Likes
13

Your “99.88%of people voting to support that tax” comment, which you’ve made several times before in other areas, sticks out as the most debatable of all the pro-tax statements you’ve made here.

Binance has 4.5x as much LUNC as all the LUNC staked on the network and their traders are clearly anti-tax, according to their demands (which certain personalities in this movement are, as usual, declining to disclose with the community, subordinating the community’s education to their own power and status) and also according to the fact that they’ve voted with their feet already by moving off-chain.

What’s actually happened is that the 21-day staking lock is functioning like a very high poll tax, paid in the form of a) duration, and b) political risk, and a very passionate minority is holding itself out as representing the views of the entire chain. Binance traders have elected to avoid the risk of locking for 21 days to express their view, and instead pushing for change by having Binance negotiate on their behalf.

If the wishes of the 9% staked represented the wishes of the whole chain, then Binance traders wouldn’t be demanding a big tax cut. But they are. The same is very likely true of traders on other cexes, who have also voted with their feet to avoid the taxes of the main chain, and the very asymmetric political risk of trying to challenge the incumbent 600B staked LUNC tokens.

14

There was just a discussion on the “Validator Discussion” on the Terra Rebels discord earlier today 9/26, regarding the need to lower the tax to encourage the return of onchain valume to something in the range of 0.01-0.02%. I think we need to at least have 0.01% to match what Binance is doing in assisting with the burn on chain. My suggestion is to lower the tax to 0.012% in honor of the 1.2% tax. Also there was mention of the need to lower the USTC tax to 0%, to make it able to compete with other stable coins once the repeg moves forward. In summary, I support lowering LUNC tax to 0.012% (in honor of the original proposal) and lowering the tax on the stable coins to 0% per suggestion of 4lex_4sh4w.

1 Like
15

Little history lesson. If it were not for PR #1273, and this post by HelloThere
https://classic-agora.terra.money/t/proposal-burn-and-remedy-fee-with-each-luna-transaction-part-i/

And the efforts of @aeuser999 [Show some respect!], Terra Rebels and the LUNC reboot would not exist. Burn is working, and well supported by the community in all ways. Just look at LUNC DAO with a four rank and 6% commission. Shows people willing to pay to burn. MEXC numbers show the same. Some people belong on LUNC2 where they can feel at home with no burn and no future.

image
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1 Like
16
  • There is not enough data to say that the “sharp and constant decline” is due to the burn tax, nor that it will persist in the long run
  • The number of transactions has absolutely nothing to do with either on or off-chain utility
  • Which bugs are you specifically referring to?
  • What other “more viable” solutions are being delayed?

And, if this gets implemented, it is just bad press: after months of hard work from the Terra Rebels and the efforts of the community, after just 1 week of the tax running, we would sound pretty dumb to say to CEXs: “sorry guys, disable the tax, please. It is not working”

Only when we can get enough data, and pressure from investors and CEXs that the burn tax is not working, only at this point we would consider changing or disabling it.

3 Likes
17

How about applying optional burn tax on the terra station rewards withdrawals? I have a proposal but I can’t create it here since my account is still new. If anyone would like to help, I have the proposal draft written.

18

Patience people. It took half a year to create and you want to stop it after 7 days? Go away. come back in 3 months.

5 Likes
19

Hey Everyone,

Glad that we got some stuff to discuss. I wont answer on some personal attack (@Vendrugo ; @Joe_Smith) that does not deserve the time.

However,

  • For the wait and see guys : I feel you, but I fear we don’t have the luxury to wait that much time. Between a proposal and and an activation it can take more than 7 days, and looking at the current data.

We had an average of 450K transaction on the week around the 8th sept.
We now have an average of 300K. that’s a 33% drop.

As long as @Vendrugo don’t show proof, I’ll consider Stakebin data to be reliable

So my question to you guys on this is: Do we want to wait this number to go lower ? As it is the pulse of the utility of our Platform. (@marcelo we’ll have to agree to disagree)

Furthermore to answer @marcelo points :

  • Bug regarding the burn tax being charged for staking; bug on Binance with 102K lunc withdrawal fees see @Zeusdraco comment.
  • More viable solution is the repeg. And the devs cannot spend their limited time on this because they need to fix what the tax broke.

I have the Utmost respect for TerraRebels movement & team members and time. They spent so much time, for the community implementing a tax they did not always believe in.

But I’d like them to be able to focus on what will bring utility long term, and breaking news, its not the tax.

Finally, thanks for all the comment offering to lower the tax to 0.1% to match CZ. It could be a step in the right direction.

1 Like
20

the data will continue to rise, you have no proof that it is not working

2 Likes
21

The price dropped when CZ_Binance did not support burn tax completely and as soon as he twitted that he will support it the price went about by over 50% in few hours,

This shows burn tax is a big deal for LUNC.

We just need to find ways to make sure the burn increases constantly.

If you want to burn it within a year then we need to burn at l least 20 billion Lunc per day, if 2 years then 10 billion lunc per day.

2 Likes