Would there be merit in adding a clause on what is the expected/recommended implementation by CEXs in regards to the burn mentioned in this future proposal?
I understand it is not something that we can interfere with since it’s off-chain, however, it could act as a go-to baseline in follow-up discussions with CEXes ref this subject.
P.S. I do like that staking and governance actions are excluded from this VAT. It means the pre-update terra station and web wallet extension could still be used for such functions if the patches don’t make it to their respective TFL repositories on time.
Thanks for the proposal explanations.
It was mentioned before in a youtube videos that there’s a plan to “whitelisting”, i think its better that dapps being built and operating in the ecosystem is not “tax in general” but instead tax only transactions that commit “economic value transfer” between wallets, like using swap, transferring assets between wallets weather its a token or an NFTs. Transaction like Initial Offerings of tokens, Initial minting or sale of NFTs or transactions that are meant to kickstart a project should be exempted from tax, in order to encourage participations, only then after such event is completed, let say after a specific period or campaign is finished only then tax exemption is removed. This creates increase value of the product and increases participation in early stage.
First of all, congratulations to the entire TerraRebels team for the achievement. Upon burning, when DK announced the new Terra, he killed the Terra Classic. He threw a problem child in the trash to raise and care for another child who had no problem. Terra Classic would already be a chain, if it wasn’t for Vegas’ proposal and determination and TerraRebels’ work.
People became interested in LUNC again due to the burning. If this doesn’t go forward, I don’t know if the chain will have a future. Burning is a risk, but not burning at all I believe is worse. Step by step, you are already doing the impossible. Put the burn in the chain and then focus on CEX, NFTs, dApps. The community is with you.
If the positives outweigh the cons it should be done. And as this is a parameter, if things fail, we can take the burn out in a few days.
Once again, congratulations on the work done.
The only thing that worries me is the 1.2% tax (not in this proposal) for the exchanges. Would it be an idea to lower the tax for the CEX to 0.12% to insure we have enough volume on the CEX? With enough trading volumez the burn is still significant.
Would that be something for this parameter proposal or a different one?
I personally believe it will be a major catalyst for retail and institutional investors.
It has been talked about so much on YouTube, Twitter and elsewhere as if it was a done deal, not going forward would be a major breach of trust and hurt the reputation of LUNC.
I think this is an important thing: “No guarantee that CEXs will burn-off chain”. There is no way that ee have the guarantee that every CEXs should have to burn-off chain?
I ask this because for example Binance will not burn in trade if another CEXs does not implement the tax, afraid of loose the traders
I really hate to be that guy, but look at this route.
There were no taxes moving the assets to becoming a validator OR to start delegating the coins There will not be any taxes getting the money out There will not be any taxes getting the LUNC to UST There will not be any burn taxes moving UST around
I should be quiet because I would benefit from this route too, but what is the purpose of burning then?
I think that burning should apply to a swap from LUNC to UST at least. This is the only way to be fair to everyone.
Agree that staking rewards and other events you mentioned there ideally should be taxed as well. But the proposal mentions below:
“Note that transactions related to governance, staking, and swaps (without sending to a different wallet) are not taxed via this mechanism, i.e. MsgSwap, MsgWithdrawDelegationReward, MsgDelegate, etc. Delegating to validators and withdrawing delegation rewards are not taxable events. Swapping from UST to LUNC and vice-versa are not taxable by this mechanism (there is different swap tax).”
I read that as those events are currently either not taxable or more complex to tax.
Thanks for the breakdown. I’m a newbie and still in the learning process of blockchain/crypto technology.
As regards to the cons particularly the long term economic welfare of Terra, what measures must be taken to mitigate the negative impacts of the tax burn?
Would a change in the tax rate or a change in the proposed new supply help in any way?
Cons
Taxes are potentially detrimental to long term economic activity and utility on-chain
Existing dApps that do not account for taxes will be unsupported
No guarantee that CEXs will burn-off chain
Tax may push remaining liquidity off-chain to CEXs that do not tax
Potential deterrent in attracting new VC/fund investors
I think the post number 45 made by mmmorgado in this chat is the right aproach.
Of all the things I read I would stick with implementing the tax for rewards withdrawal, and in the near future changing the burn rate to leave developers maybe 0.1% or 0.2%.
The rate of 1.2% has already been decided for months. It is a path of no return. CZ has already said that we have to implement onchain for him to implement offchain on Binance.
So the important thing now is to implement the 1.2% rate anyway. Adjustments can be made later. but if possible tax now the rewards and especially the escape route through the USTC
When LUNA / USTC go on / off CEX, they have already been taxed for 1.2% ( if return trip is accounted that would be 2.4% ).
IMO no tax on staking delegation / receiving rewards are the right way to go.
With the uncertainty of how 1.2% tax implementation will impact the liquidity of the chain, if 1.2% tax is to be implemented on staking, this basically doubles the effective tax paid to 4.8% for a round trip ( CEX → staking → undelegate → CEX )
As a holder, I would like to see the the supply to be burned, but 4.8% tax rate is concerning and will do more harm than good, losing competitiveness to other similar chains.
Ultimately burn should be done by Utility usage instead of relying on transactions alone, this 1.2% tax implementation is just the start and we should be patient and focus on building dapps to achieve a sustainable liquidity in the long term.
For Propose new governance, maybe this can be taxed to reduce the spammed proposal? Also serving as a way to better utilize the governance.
Really appreciate and thank you for all your work and effort to LUNC, hats off to Terra Rebels and TFL!!
Very good Mr. Kim, maybe staking could include a burn tax of 1% on rewards too?
Edit Actually, scrap that thought, having further considered and read other opinions it may be too much and end up relying on transactions alone rather than usage.
Thank you and the Terra Rebels team for your efforts, expertise, and people skills in reaching out to TFL and others as this is essential. Co-operation is key and will benefit both parties if sense prevails.
Worded perfectly my friend, a review period of every three months is exactly what we need to allow the community to propose alternate ideas and thoughts. My question would be should this tax burn plan have an end date? for example the tax burn will commence on date xx/xx/xx, it will be reviewed every three months to allow for changes and this will continue for 72 months.
chain, if it wasn’t for Vegas’ proposal and determination and TerraRebels’ work.