Let's get ourselves together, bring liquidity back on chain to increase tax income

Governance & Proposals
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We are all here because we trust LUNC & USTC can be rebuild and there’s a spot for us in the future. Things will go well when we stay calm and discuss constructively, towards issues to be addressed but not particular person / organization.

One of the issue which we aren’t generating enough cashflow to have sufficient leftover for other projects to come to LUNC & USTC after recurring expenditure such as payments to JL1TF, infrastructure needs and refilling oracle pool.
As community cannot come to an agreement to increase income by adjusting tax rate, utilizing what we currently have on hand and build on top of it might be the best option we have.

I might be biased but I really do think my proposal of bringing liquidity back on-chain ( full ) / ( short ) is a pretty good spot to start, as funds currently idle in community pool can be put to good use and generate part of the required cashflow going forward. The increased liquidity on-chain can bring more transactions on-chain thus increased tax income without increasing the tax rate ( remain at 0.2% ).

LUNC & USTC might have brought down by arbitrage traders exploiting the mint/burn algorithm, we can pick ourselves up from where we’ve fallen, utilizing them to generate more tax income for community pool to spend for future development projects.

Last but not least, we can take a step back, have multiple projects going and see what we achieve. There are different dapps like games, dexs, etc. although not as many as pre-crash, LUNC & USTC are in progress of rebuild and there’s much brighter future to come.

If linked proposal has more discussions, new proposal will be put on for vote after adjustments based on discussions.

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Actually, this is what I was talking about doing immediately. Liquidity swap pools are what we need. The entire crypto space is exploding with DeFi dApps and we are lagging behind.

Terra Luna Classic IS a DeFi Coin and I am not being able to make other community members understand that.

THIS is a proposal that we should be seriously working on. This will open up various possibilities of trading with DeFi coins on the Cosmos ecosystem.

Though I think this is extremely difficult to take up for the current L1 team without a permanent lead dev. I dunno what is their status since LBA has already put out an ad for the lead dev position that Z left. We have to fill that position before we can move with this.

Being a developer I can say that this will require a developer who is already working on the Cosmos ecosystem in L1 development specifically. We have to be careful when we choose the team for this.

I believe this can be discussed further.

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For lunc,defi project = repeg.

Ust generates the need by use cases.And Anchor stimulates it,digesting liquid pool.Swap mechanism is a bridge and an algo mechanism for UST stability.

It’s simple.

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@arunadaybasu
As I am not that familiar with coding, the best I can do is throwing ideas out for discussions ( which obviously leave a lot of technical stuffs behind, including how to execute the idea ).

LUNC & USTC pair is bought up as an example as there would be less dispute in community interest. Also, dapps for liquidity pools on-chain are readily available such as Terraswap, Astroport, Terraport, etc. should not require as much effort / workload as compared to building a DEX from scratch.
For now, I think ways that fairly quickly can bring in additional income from outside of LUNC’s ecosystem should be prioritized to allow us to ease the pressure, free up the resources and room for building a DEX from scratch and for trading with DeFi coins on the Cosmos ecosystem and other dapps projects on LUNC.

To me, capital really seems to be the issue. After the 150K incident, community is grabbing on the community pool a little bit too tight and seems not as willing to paid devs. Understandably so, but I really think L1 team has showed they can deliver and the PTSD in the community really affects how we can move forward. Just maybe, if we have more income, there will be more room and less pressure and the atmosphere will be better overall for building on LUNC.

I personally is really sorry to hear Z left, but community blockchain will come with dramas and bad actors which no one can avoid, can’t really say much as we are not the ones on the hot seat. Lead dev is not a small position to lose and this is a knock back for L1 team. Thankful for all the things JL1TF has achieved and done despite in the middle of the chaos as a team.

Side question, is creating separate community pool ( acting same as current community pool ) a rework of the modules? Can this be done by duplicating current codes for community pool and change the name of var ( + testing )? Then, remaining would be writing smart contracts? Or am I missing anything?
STEP 1: Create a separate community pool identical to community pool
STEP 2: Use Governance to vote how much from community pool to put into this new pool
STEP 3: Smart Contracts to be voted for execute in Governance to add / remove liquidity from New pool to / from liquidity pools for LUNC & USTC in dapps ( e.g. Terraswap, Astroport, Terraport, etc. )

@SwordDemon
It’s simple when we have the capital to hold the peg, which we currently don’t.
That’s why this post here would like to raise the discussion for ways to increase income for community pool other than relying on dapps projects. We will need incentives to attract more dapps to come and build on LUNC.

I don’t see the controversial swap mechanism be accepted by the community anytime soon, but if we accumulate enough capital to back the peg ( current solution in discussion in other proposals ), a workable solution for algo stable can be found and proper protection for funds avoid potential draining flaws, the community may change their view on re-enable the mechanism.
Any ideas for USTC use case?

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It’s a

It’s a contradiction question.
If Ustc back to 1$ and stable,we won’t lack of use cases.
But in contrary,if we have enough use cases,it may help Ustc back to 1$ and stable.
And the last one is harder than the first one.Because when it’s unstable,may not too many use cases want to use Ustc.

It’s out of my IQ,we need a smart person like you to solve this :slight_smile:

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its not good if you increase tax on lunc now ! Investors are here cause the tax is 0.2% if you ll get the tax up to 1.5% they ll all leave to get into another coin which the same low tax !

First needs to stabilize the utility then investors will join lunc to implement the coin ,then the tax can be increased from 0.2% up to 0.4% and so goes on !

Think about you leaving in a country and in 5 days i ll tell you give me 100$ per month then the next day i m telling you give me 200$ but your income is 300$ ! first we found a way to increase the income then we see the tax

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@SwordDemon
Nah i am just a dummy too but thanks for your compliments.
Seriously I think the idea in the linked proposal is so simple that definitely has been proposed by others, I probably just missed it.

@nikos9595
This proposal does not mess with tax rate, tax rate will remain on 0.2%

The point is to make use of idle funds in community pool to provide liquidity on-chain. By difference of prices for LUNC & USTC pair in liquidity pools and DEX, there will be arbitrage opportunities ( financial incentives ) for traders.

e.g. LUNC / USTC pair ( Take Base for LUNC & USTC as 100 )
In DEX, when LUNC stays flat ( 0% ), USTC rised +10%,
the LUNC / USTC will change from 100 / 100 to 100 / 110 = 90.9

While in liquidity pools on chain, as the price calculation in liquidity pools are by AMMs, the LUNC / USTC price will not follow DEX to move unless someone trades with the pool. Which gives traders the difference of 90.9 ( on DEX ) vs 100 ( on chain liquidity pools ) for LUNC / USTC.

Breakdown formula for arbitrage opportunities to appear as below

Δ in movements of LUNC & USTC prices at any given time > DEX’s trading fees ( 0.1% taking Binance Spot ) + 0.2% burn tax + on chain transaction fees ( neglectable ) + swapping fees in liquidity pools ( around 0.3% ) + slippage in liquidity pool ( varies based on total liquidity in pool )

which gives us
Δ in movements of LUNC & USTC prices at any given time > 0.6% + slippage

Linked proposal aims to minimize the slippage variable.

Just to clarify, the 10% described in proposal ( as example ) is not an increased tax, but a split from current burn amount, taking 10% to invest in ourselves.
Continuous contribution described in the short proposal is splitting 10% from the current burn part of 0.1% ( 50% of 0.2% tax goes to burn, 50% goes to community pool ), which if community did agree to split part of the tax to invest in LUNC for the long term, will change the tax to:

0.1% to community pool, 0.09% burn & 0.01% continuous contribution in the new community pool for increasing total liquidity in liquidity pools on chain.

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