Summary: This proposal aims to enhance the burn system without making changes to the fee and without increasing the volume in the chain. Currently, the 0.5% burn tax is split into 80% burns and 20% community pool (CP). My proposal takes into account only 80% of burns (ie 80% of 0.4%, which corresponds to 80% of 0.5%) and suggests securitizing that amount. Through burn securitization, the goal is to make burns more predictable, anticipate some burns, and increase volume through trading NFTs.
Why: The current burn system lacks reliable predictions and does not allow for adequate burn planning. This proposal aims to address these issues by providing a mechanism to make burns more predictable and increase volume within the system.
Proposal: The proposal consists of the following elements:
Creation of “LuncTax” NFTs:
The L1 team will create a collection of NFTs called “LuncTax”.
Owning and staking these NFTs will entitle the holders to receive 80% of the securitized burns for a period of 10 epochs (approximately 70 days).
Sale and Burn of LuncTax NFTs:
A portion of the LuncTax NFT collection will sell at a price calculated as the average burn rate over the past 10 eras, multiplied by 80% (the securitized percentage of the burn amount), divided by the number of pieces available (1,000. 000).
Unsold NFTs may be made available on a dedicated marketplace at a price 10% higher than the sale price.
The proceeds from the sale of the NFTs will be burned immediately.
Creating a Separate Oracle Pool:
A separate oracle pool will be created to receive taxes and distribute them to LuncTax stakeholders.
Governance Vote and Renewal of Securitization:
Two weeks before the 10 epochs expire, a governance vote will be called to decide whether to renew the NFT securitization or return to its current status.
If any LuncTax NFTs remain unsold, the remaining luncs in the new oracle pool will be burned at the end of the 10 epochs.
New Presale and Distribution of NFTs:
If the outcome of the governance vote is positive, one week before the 10 epochs expire, a pre-sale of the NFTs for the next period will start through an auction. The top 1,000,000 bids will get the rights to the taxes for the next 10 eras. The minimum bid starts from the initial sale price of the NFTs.
One day before the start of the new 10-Epoch period, NFTs will be distributed to the winners of the auction.
Benefits of the Proposal:
Make burns predictable within a defined 10 epoch period.
Anticipate some of the burns that will occur in the future.
Increase volume through trading NFTs (20% of the 0.4% tax that previously went entirely to the burn wallet will continue to be burned).
This proposal aims to improve the efficiency and predictability of the burn system without changing the fee and increasing the volume in the chain.