[Proposal] Deprecate Seigniorage Reward Policy and Increase Gas Fees by 5x

This proposal aims to deprecate the Seigniorage Reward Policy (effectively stopping LUNC re-minting from burns) and increase gas fees by 5X to capitalise the Community Pool and increase Validator/Staking Rewards.

Note: This proposal has been built upon the “Stop LUNC Reminting From Burns” proposal by @Cryptoking_NFT and also inputs from @godoal on the “Refactor Burn AnteHandler and deprecate Seigniorage Reward Policy” proposal by @ek826


  • The on-chain burn rate has drastically dropped in the last 4 weeks and looks to further reduce with Binance cutting down on burns
  • A total of ~1B LUNC were burned in the last 4 weeks
  • Considering the current Seigniorage Reward Policy of 10%, a total of ~100M were re-minted in the CP in the last 4 weeks

On the other hand:

As illustrated above, the Seigniorage Reward Policy has become a pretty defunct source of funding for the CP, and is causing more harm than benefit to the community.

As a result, the Seigniorage Reward Policy should be deprecated immediately and the CP should continue to be completely funded by the existing Community Tax that was passed in Prop 4080.

Further Capitalisation of the Community Pool

In order to further capitalise the CP to meet the funding requirement of devs, I further propose to increase the current gas fees by 5x.

This will not only further capitalise the CP for dev funding, but also increase the staking rewards of validators/delegators.

A Note on Gas Fees

  • The gas fees for a MsgSend transaction on Terra Classic is 0.894277 LUNC, which translates to $0.0001375398 at current market value of LUNC.

On the other hand:

  • The gas fees for a MsgSend transaction on Terra 2.0 is 0.001943 LUNA, which translates to $0.00253446318 at current market value of LUNA.

At current market value, gas fees on Terra Classic is 18.42x cheaper than Terra 2.0

Even after increasing the gas fees by 5x, Terra Classic gas fees will still remain 3.68x cheaper than Terra 2.0

Why this proposal works

  • No mints, therefore more burns
  • More rewards for stakers/validators
  • More funding for devs from the CP

This would be implemented as 2 separate proposals to be voted upon independently.

  1. The first would be a Text-based Proposal to increase gas fees by 5x by validators as stated here: https://fcd.terra.dev/v1/txs/gas_prices.

  2. The second would be a Parameter Change Proposal, that would make the following changes:

“subspace”: “treasury”,
“key”: “RewardPolicy”,
“value”: “{“rate_min”: “1.0”, “rate_max” “1.0”, “cap”:{“denom”: “unused” “amount”: “0” }, “change_rate_max” “0.0”}”

Comments and feedback are welcome.

Note: As per @godoal there is a discrepancy between the data provided by StakeBin and the data from LUNC Penguins. However, the conclusion to deprecate the Seigniorage Policy and increase gas fees by 5x to capitalise the CP and increase validator/staker rewards stays the same.


Simple and easy solution.

But there must be something done in case price goes up. Because then Lunc fees will be bigger as Luna fees (assuming Lunc have much more room to grow because of burning). Maybe there can be some sort of dynamic fee (in $ terms)? If price of Lunc is to high fee in Lunc is lowered to some normal $ levels.


Changing gas prices is fairly simple and straightforward and can be anytime adjusted in the future based on demand/supply.


I really like this idea, it solve many issues (binance, reminting BS, community and so on). I will totally support this proposal.


Gotta say I’m liking this proposal. Think it addresses the issues our community has been facing recently, specially the Binance ultimatum.


Smart solution.


It’s really how every blockchain works, ours has that capability too, so why not use it rather than writing code to force things in a hackish way…


Only issue I see is how some dApps could be disincentivized of doing business here due to high volume of transactions.
Yet as the prices are low…It will serve a greater good.


Yes, exactly. Even after raising the gas fees by 5x, the gas amount will be ~$0.000687699. This is way too minuscule to cause any material impact to dapps.


This is a really good idea! Our tx fees would still be cheap even with the 5x. Positives far out way any negative.


Thanks dfunk! I think the only thing that may need double checking is the amount being sent to the CP… I believe luncpenguins is correct. We would have to 5x both the lunc and ustc multiplier, otherwise the system choses the cheapest option…


yes, Lunc penguins data is more accurate - will be adding the estimate amount being sent to the CP every month shortly.

5x multiplier will be for all the denoms listed here: https://fcd.terra.dev/v1/txs/gas_prices


This seems like a great idea. Good job!


Nice one, great idea. Thank you for putting it together.


Guess you watched the classy AmA lmao. Already a prop here for turning off Re-minting. Put forward by Ed and lunclive. Increasing the gas isn’t simple. Its not hard but not simple. I would also go back and listen to that AMA. Gas wont add more to the oracle pool. That is not what i said. It can take pressure off the oracle pool. I wont explain it here its in the AMA. Yes Ed is right that USTC and lunc gas would have to be raised at the same time. Ill let u guess why.

Based on a 4 week analysis of Community Pool funding on LUNCPenguins (excluding epoch mints), the following can be estimated:

  • The CP is funded, on average, by ~3.5M LUNC a day from Community Tax alone
  • This results in a CP funding of ~105M LUNC a month

As a result, raising the gas fees by 5x should result in CP funding of ~525M LUNC per month from the community tax alone, which should be more than enough to cover dev costs.


There are actually three with this one included, which is nothing new as we are in a discovery phase for the most optimal solution.

Simpler than a hard-coded solution and more natural to the way the chain works. One way or another we need to stop relying on the tax hack not building upon it.

That was never mentioned in the context of this proposal, maybe was on the AMA but is not the problem that is addressed here.

As mentioned earlier by the author (see ref below) the increase will take place in the whole series of the gas_prices.
We are here to find the optimal solution so if you have some knowledge to share (even though covered by the author) this is a community forum and the right place to contribute to our community knowledge-building.


More rewards for stakers/validators.

How can you please explain unable to understand ? In your proposal

Dfunk,like always a great prop.


It does seem that numbers end up.

@ek826 can this be consider as a solution for CP? After all it does bring much more funds in as tax. Lunc and Ustc wise (if fees are up for 5x).

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