# Lower the tax rate to encourage higher on-chain volume **URL:** \ **Category:** Governance & Proposals\ **Created:** [September 29, 2022, 10:54am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142 "2022-09-29T10:54:08Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![selmo\_TV](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/selmo_tv/32/18525_2.png) [@selmo\_TV](https://classic-agora.terra.money/u/selmo_TV)\ **Post date:** [October 2, 2022, 7:05pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/114 "2022-10-02T19:05:40Z")
> [@Akujiro](#): > > this reduction to 0.2 is needed BS, baseless and incorrect information basically FUD > [@Akujiro](#): > > The LUNC coin is decentralized and therefore anyone in the community can put up a proposal. go for it, noone is denying you creating a proposal, is this not a open discussion? Alex 's proposal: #### #4350 Rejected “Repudiate the 1.2% burn tax” ---
**Author:** ![GERALDGERALD](https://avatars.discourse-cdn.com/v4/letter/g/f14d63/32.png) [@GERALDGERALD](https://classic-agora.terra.money/u/GERALDGERALD)\ **Post date:** [October 2, 2022, 7:35pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/115 "2022-10-02T19:35:06Z")
Low onchain volume means less rewards for validators and less rewards for delegators, and that’s only one of the many negatives a low on-chain volume brings, which is basically the lifeblood circulating through the chain. The rewards for validators and delegators comes from the Oracle Pool , NOT from On-chain Volume. The rewards are fixed at 500 million coins per day REGARDLESS of whether the on-chain volume is 1 billion or 1 trillion because those two are NOT related. Claiming that we do not need the onchain volume high for now and therefore are ok to completely wreck it because no dApps are there yet or the cosmos version is not updated, is not a very responsible way of thinking towards the future of the LUNC chain . Emphasis on Future. At this point in time, whether the on chain volume is high or low is not really an area we should be focusing on because a high on-chain volume does not have any tangible benefits at this time. The on-chain tax reduction will simply crash the price of the coin as people find it cheaper to move their coins into circulating supply rather than restake. It makes no sense to reduce the tax at this time when it is both reducing total supply AND preventing circulating supply from rising. At the same time, the attempt at reducing it when CEXes already declared their support for the 1.2% tax less than 2 weeks ago will also lead to loss of trust from the CEXes who dedicated their time and resources to support the upgrade only for the community to do an about-turn barely 2 weeks later ---
**Author:** ![UteXvg](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/utexvg/32/18911_2.png) [@UteXvg](https://classic-agora.terra.money/u/UteXvg)\ **Post date:** [October 2, 2022, 8:58pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/116 "2022-10-02T20:58:53Z")
Hi there. You are right, validator rewards come from the oracle pool. However I would like to know how you think the oracle pool is filled? Volume on chain should always be a concern now, and later. That his how any digital currency shows its value, growth, or contraction. It’s important to always keep an eye on it and work to always keep it growing. Cex’s have nothing to do with this, no cex currently supports 1.2 percent burn, the ones supporting the burn so far only support around .1 percent or less, so it isn’t like we are showing them any negative action. More so showing them we are paying attention and making burns more inline. It’s of my opinion that more cex’s would be more inclined to support a more realistic tax. We all are of the same thought process that we need more dapps and use cases for the chain, we all are for the burn and the need for supply to be reduced. In fact many of the ustc proposals actually call for the tax burn to be removed completely in change for swaping (which would burn coins in a different manner) So I guess it is important for everyone to remember we have more in agreement than we do in opposition and the only thing in opposition is the amount of the tax and the outcomes. I think it would help for people like Vegas to support his claims with some data of dapps, dex’s, and cex’s so we could all get a more realistic idea of where things are at. Data has been given to support the lowering of the tax, for the betterment of the chain and the burn, now it needs to be argued for the keeping of the 1.2 number, to do this a list showing what isn’t fixed would help show where some volume could be missing. It shouldn’t be just take my word for it. As for the chain and some of the things people have said about waiting for TR, that isn’t even what TR wants. That shows people wanting them to be the controlling party of the chain, they have been explicit that they don’t want to be the only party working on things. So we need to keep that in mind and all work to support the best outcome in all the different ways we can. Thanks for listening. If anyone has data on dapps, cex’s and dex’s please post that information. ---
**Author:** ![premiero](https://avatars.discourse-cdn.com/v4/letter/p/bc8723/32.png) [@premiero](https://classic-agora.terra.money/u/premiero)\ **Post date:** [October 3, 2022, 2:43pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/117 "2022-10-03T14:43:34Z")
![obraz](https://global.discourse-cdn.com/terra/original/3X/b/e/beb20f21a7704ff4871d065cd1b4bb563b26b58b.png) Binance just burned 5.6B of LUNC. I say no to proposal. Let’s wait at least 3-6 months before we take any actions that will change tax percentage (if ever). ---
**Author:** ![UteXvg](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/utexvg/32/18911_2.png) [@UteXvg](https://classic-agora.terra.money/u/UteXvg)\ **Post date:** [October 3, 2022, 6:10pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/118 "2022-10-03T18:10:10Z")
Again, binance and this proposal are completely separate. We are talking about on chain not off chain. This would still be 2-4x higher than any CEX has implemented ---
**Author:** ![Pedynho](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/pedynho/32/19283_2.png) [@Pedynho](https://classic-agora.terra.money/u/Pedynho)\ **Post date:** [October 3, 2022, 7:22pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/119 "2022-10-03T19:22:34Z")
I’ve a litte idea to improve the token circulation and increase burn by the all community… What do you all think about make every week a giveaway where the participant pay for example 10k LUNC to enter. We need a site to show all tranzactions, the tranzaction will be the comprovant of participation. The total prize correspond about 20% (sugestion) of total arrecadation and will be actualized in real time, and at the end of the week an random address (participant) will be chosed and receive the prize. The other 80% of arrecadation would be send to burn address! Could be usefull! thak’s and sorry about my poor English! I’m from Brasil. XD… my twitter: pedrogomes\_js ---
**Author:** ![UteXvg](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/utexvg/32/18911_2.png) [@UteXvg](https://classic-agora.terra.money/u/UteXvg)\ **Post date:** [October 3, 2022, 9:03pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/120 "2022-10-03T21:03:44Z")
I have seen a lot of ideas like this where their is some type of lottery system. The problem becomes who what controls that outcome. How easily it could be manipulated in favor of selected people. Even the lottery in the US was fixed at one point, might still be for all I know. The last thing we need is any rugging or manipulation when we are rebuilding. So if you could come up with a way to ensure there is no rigging then it could be interesting ---
**Author:** ![Pascal](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/pascal/32/18751_2.png) [@Pascal](https://classic-agora.terra.money/u/Pascal)\ **Post date:** [October 4, 2022, 3:29am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/121 "2022-10-04T03:29:06Z")
Please include the following thought into your proposal. Reconsider the tax rate to include a component for our DEV team, so they can finance the TR roadmap and keep the needed DEV’s on board. For if we cannot achieve that - no matter where the taxation level lands or remains - we are doooomed. For the DEV’s alone the rate of 0.2% sounds about right. Which would make your tax 0.4% at least. Better still - don’t go ahead with your proposal 🙂 but I already objected so I leave that part. ---
**Author:** ![GERALDGERALD](https://avatars.discourse-cdn.com/v4/letter/g/f14d63/32.png) [@GERALDGERALD](https://classic-agora.terra.money/u/GERALDGERALD)\ **Post date:** [October 4, 2022, 4:05am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/122 "2022-10-04T04:05:57Z")
The current Oracle pool had around 300 billion LUNC and would drain in one and a half years, and even then due to all the fees from swapping and staking, will never really drain completely so again, the current low on chain volume does not impact the Oracle pool at this point in time. A lot of the concerns being raised do not apply to LUNC at the stage we are at. In the roadmap, the team does want to look for new reward mechanism and it is actually the last thing on the roadmap, meaning that this issue is valid, but not at this point in time. CEXes actually added sweep fees to correspond to the burn tax Also remember Binance asked for a burn tax on-chain in the first place. With regards to DApps, once again, as of now, that is not an issue as they are largely inactive until the upgrades are done later on. As such,the issue of dApps is once again, not an issue of concern at this time and I do not understand why it is raised as a reason to lower the burn tax when those dApps are not yet active and will not be until either the end of this year or the next quarter. Most of the DEXes already incorporated the 1.2% burn tax and in fact are often the biggest contributors to the tax. A lower burn tax simply leads to a higher circulating supply because that is how people work, essentially undoing the impact of both the on-chain and the Binance off-chain burn on price as more coins will jump back into circulation each time there is a small price rise leading to a price decline. Currently the 1.2 % burn tax on chain has slowed down this effect, as on average just under 100 million of the 500 million released daily from the Oracle Pool goes back into circulation. The tax rate as it is now compels people to restake, rather than sell . As I keep emphasizing. ---
**Author:** ![Panuwat\_Sriyanon](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/panuwat_sriyanon/32/8542_2.png) [@Panuwat\_Sriyanon](https://classic-agora.terra.money/u/Panuwat_Sriyanon)\ **Post date:** [October 4, 2022, 6:34am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/123 "2022-10-04T06:34:26Z")
I can’t wait to vote “YES” to this proposal ---
**Author:** ![Hebbdb\_Hdnxnbrvdv](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/hebbdb_hdnxnbrvdv/32/6882_2.png) [@Hebbdb\_Hdnxnbrvdv](https://classic-agora.terra.money/u/Hebbdb_Hdnxnbrvdv)\ **Post date:** [October 4, 2022, 7:54am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/124 "2022-10-04T07:54:39Z")
I agree with your opinion. I think, we should leave the on-chain tax at 1.2%. Then we should propose to change the transaction tax on cex around 0.4%, where cex is withheld 0.05%. So cex will burn about 0.35%, i think that tax rate will be more easily accepted by cex ---
**Author:** ![www.hottstocks.com](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/www.hottstocks.com/32/9286_2.png) [@www.hottstocks.com](https://classic-agora.terra.money/u/www.hottstocks.com)\ **Post date:** [October 4, 2022, 8:20am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/125 "2022-10-04T08:20:29Z")
some people might have their own hidden agenda in here. If you want to burn 6.9T within 3 years then we must apply 1.2% burn tax on every single transaction or forget about it. ---
**Author:** ![Passerby](https://avatars.discourse-cdn.com/v4/letter/p/a88e57/32.png) [@Passerby](https://classic-agora.terra.money/u/Passerby)\ **Post date:** [October 4, 2022, 8:56am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/126 "2022-10-04T08:56:34Z")
What gives the confidence that having a lower tax rate will boost the on-chain volume? Think it’s more worthwhile to try get more utilities into the ecosystem than to try lowering the tax rate. ---
**Author:** ![Pedynho](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/pedynho/32/19283_2.png) [@Pedynho](https://classic-agora.terra.money/u/Pedynho)\ **Post date:** [October 4, 2022, 12:02pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/127 "2022-10-04T12:02:38Z")
There is an site who have api to true randomness (random dot org), using that service we can be more faith, in addicton to the source code of app must be open to every one who wants see how it works. I can develop it in about 3 months, but the real problem is, the owner of this app must be an leader of the community, in this case teh community will trust it…and is not about make money, is about grow the burn system, all community have engaged with #burnalot and its was only send to burn adress, this app will make more people came, interested in make money but will find an community angaged to grow an project. That is my oppinion, but you rigth in generally “trust” is the main problem. ---
**Author:** ![Koch](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/koch/32/20729_2.png) [@Koch](https://classic-agora.terra.money/u/Koch)\ **Post date:** [October 4, 2022, 7:27pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/128 "2022-10-04T19:27:01Z")
What if someone controls that atmospheric noise for their own gain? Random numbers should not be generated with a method chosen at random. --Donald Knuth ---
**Author:** ![Koch](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/koch/32/20729_2.png) [@Koch](https://classic-agora.terra.money/u/Koch)\ **Post date:** [October 4, 2022, 7:57pm UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/129 "2022-10-04T19:57:12Z")
_ **Revitalizing Stability Design** _ To attract utilities ~ we desperately need a completely new core design of Stability… Something that will shock & awe potential bad actors and impress the whole crypto-community… Something with the simplicity of Gold… 💰 > [@The Gold Standard of Stability](https://classic-agora.terra.money/t/the-gold-standard-of-stability/47101): > > Governance Voting Limitation Act To enable Terra Classic to be a national voting platform for a possible world government (for and beyond the Terra Station) ~ each and all wallets (delegators & validators) should be limited to (1) governance vote and each and all wallets should be pegged to a real and verified identity to be allowed to vote. No ID pegged - no vote | only staking. To clarify - a unique identity would only be allowed one wallet, the same person would not have 50 wallets and 50 vo… ---
**Author:** ![wrapped\_dday](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/wrapped_dday/32/19431_2.png) [@wrapped\_dday](https://classic-agora.terra.money/u/wrapped_dday)\ **Post date:** [October 5, 2022, 3:10am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/130 "2022-10-05T03:10:54Z")
Technically oracle providers like Chainlink can provide VRF inputs for dApps. This proposal will be written and posted up here by the 10th of October (Monday), under Akujiro’s name. @Passerby > What gives the confidence that having a lower tax rate will boost the on-chain volume? Nothing, per se, but the tax has most definitely harmed what little we do have. We are pretty much defaulting to Terraswap, and that’s it. I would like to fund more on-chain dapps/utilities, but it is a chicken/egg problem: lower tax rates would encourage businesses to build on there who are not in agreement with the burn narrative (of which there are few measurable statistics/goalposts). Overall, it makes that aspect of negotiation easier. Otherwise, I have to convince people that 1.2% burn tax going to LUNC holders only (and not even the devs) is a worthy sell. (By the way, this is a very hard sell. It can be done, but I’m not keen on doing it for multiple reasons, disingenuousness as the first one.) @Pascal > Please include the following thought into your proposal. Reconsider the tax rate to include a component for our DEV team, so they can finance the TR roadmap and keep the needed DEV’s on board. The revised proposal will include a 0.01% apportionment to fund at minimum the LCD endpoint requirements. This is a number suggested by Ed if we are to propose a reduction to 0.2% effective tax rate. If you are willing to apportion more, we can change this parameter. ---
**Author:** ![StrathCole](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/strathcole/32/19208_2.png) [@StrathCole](https://classic-agora.terra.money/u/StrathCole)\ **Post date:** [October 5, 2022, 9:38am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/131 "2022-10-05T09:38:47Z")
@UteXvg @GERALDGERALD The rewards highly depend on volume. The oracle pool lost it’s funding source mint/burn tax when this was disabled for LUNC. Currently around 25-30% of rewards come from transactions (depending on volume) while the rest is draining the funds from oracle pool that were generated during capitulation event. Also transaction fees fill the community pool which will be very important in the future to have it filled with a good amount of coins. So really, transaction volume on chain matters. Not only for burning. ---
**Author:** ![Arnoud](https://avatars.discourse-cdn.com/v4/letter/a/d26b3c/32.png) [@Arnoud](https://classic-agora.terra.money/u/Arnoud)\ **Post date:** [October 5, 2022, 11:08am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/132 "2022-10-05T11:08:31Z")
I understand the idea behind the proposal. 1.2% tax add up quickly, 4 on chain transactions and you lost almost 5% of your coins. Nobody likes that. So it reduces the use of the chain. I also understand everyone who opposes reducing the tax. There is still not a lot of data about the 1.2% tax burn and on chain volume might pick up in coming weeks (but as some pointed out, most likely not, as dapps volume only accounts for a very small % of on chain volume). Also the proposal assumes on chain volume will pick up, but who knows if cex’s are gonna use the chain again (as was pointed out, most on chain volume was coming from cex’s) now that they already implemented other “workarounds”. Than there are the worries of “bad publicity” by reducing the tax, when it has been just implemented with a lot of social engagement. I have thought about it myself a long time, because my instinct and emotions immidiately say no, when reading about tax reducing. But to be honest, even with on chain volume of 150B lunc daily, it will take over 10 years to burn down to 10B with the 1.2% tax only. So i know the 1.2% tax is not the answer to that. And i know some other ideas/proposals are coming for this (burning). So is it really a big problem to lower the tax to 0.2%, if this might increase use of the chain. It might not get back to previous hights, but at least the chain stays attractive for future investors/dapps. Because in the end, who wants to lose 5% of its “investment” in 4 on chain transactions, not me, not you, i think. Its always easy to ask of others who are using the chain to pay 1.2% tax, and to have your coins staked or sitting somewhere without moving (as most of us have most likely, like me). So i think indeed, it is better to lower the tax to a much lower level. Is the 0.2% the sweet spot, who knows? It can always be changed again. And btw, the proposal goes up on the 10th, voting ends a week later, so we still get almost 10 days of additional data before finally making a decision. ---
**Author:** ![Koch](https://sea2.discourse-cdn.com/terra/user_avatar/classic-agora.terra.money/koch/32/20729_2.png) [@Koch](https://classic-agora.terra.money/u/Koch)\ **Post date:** [October 5, 2022, 11:49am UTC](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142/133 "2022-10-05T11:49:46Z")
> **[Revenue Act of 1964](https://en.wikipedia.org/wiki/Revenue_Act_of_1964)** > > The United States Revenue Act of 1964 (Pub.L. 88–272), also known as the Tax Reduction Act, was a tax cut act proposed by President John F. Kennedy, passed by the 88th United States Congress, and signed into law by President Lyndon B. Johnson. The act became law on February 26, 1964. > Kennedy proposed the bill on the advice of Keynesian economist Walter Heller, who believed that temporary deficit spending would boost economic growth. The act was initially blocked by conservatives like Senator Ha... [Previous page](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142.md?page=5) [Next page](https://classic-agora.terra.money/t/lower-the-tax-rate-to-encourage-higher-on-chain-volume/47142.md?page=7)