@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.