Reduce tax to a sustainable 0.1% to revive on-chain activity and promote CEX 0.1% off-chain / spot trading burns

On-Chain burns problem statement:

LUNC supply burn by taxing is an excellent and proven method of reducing supply, as has been seen over the days from the 21st of September. The community is thankful for the efforts that have gone into making burns by tax a reality.

However, the on-chain activity reports from the 21st of September onwards clearly proves that users actively avoid the 1.2% tax, which severely impacts current and future utilization. The 1.2% burn tax initiative has caused a 10-fold + reduction in on-chain transaction activity.

This clearly proves that the user perceives the 1.2% tax parameter as too high. The high tax parameter is also a barrier for other projects to build on LUNC, further limiting the use.

Off-Chain burns problem statement:

As we’ve learned, CEX’s have not implemented off-chain burns uniformly, for example:

  • Some CEX’s, like MEXC have implemented a 1.2% burn;
  • Binance: doing charity burns of < 0.1% by burning their own transaction fees (for which we are very grateful); and,
  • Other CEX’s have not implemented any spot trading burns.

Therefore, it has already been proven that the 1.2% burn is being perceived as unfeasible by not being implemented uniformly.

Relying on weekly Binance burns to keep the price of LUNC afloat is not a sustainable business model, and it’s not fair of us to expect any CEX to burn their fees just for the sake of the community.

The LUNC community is a young community, and we should take the opportunity to learn from our successes, failures and successful industry leaders such as CZ Binance, who has built the largest CEX from understanding the industry.

Boycotting any CEX for not supporting the tax burn is “Cutting off the nose to spite the face”.

Ideal situation:

While it is undeniable that the supply must be reduced to increase investor interest by an increasing token value, utility is equally, if not more important. The banking industry has proven that when transaction costs diminish, an economy becomes more efficient, and more capital and labor are freed to produce wealth. The same principles apply to cryptocurrency.

Therefore, the ideal situation would be to increase transaction volume, by reducing tax. If users perceive the tax as negligible, on-chain transaction volume will be restored. In the case of off-chain spot trading, we cannot enforce a tax a high tax rate that will reduce spot-trading volumes.

This proposal therefore aims to aims to propose a feasible tax parameter that can be implemented globally / uniformly on both off-chain and on-chain transactions to achieve a higher burn rate.

Other initiatives being discussed:

The 1.2% tax is seen as a failure by some community members, and a lot of members have now shifted their attention to inventing other burning and revitalization mechanisms e.g., USTC repeg, USTN proposals etc. However, addressing the burn parameter issue is low-hanging-fruit.

Much work has already gone into implementing the tax burn mechanism, so let’s make the most of our efforts that have already gone into LUNC thus far. Changing the burn parameter will not require as much effort as it took introducing it.

Determining the ideal tax rate:

All proposals on the tax rate that have been presented focused on which tax rate gets us to the end-goal of 10-Billion supply the fastest. The fallacy with that approach is that it does not take user perception into account. The user perception of high tax currently kills the transaction volume.

There have been posts about changing the tax parameter ranging anywhere between 0% and 1%, each with a supporting mathematical model. The flaw of all mathematical burn period models is that the model does not and cannot take user tax avoidance behaviour into account. Also, any further attempts at building models will also be flawed as we do not have data supporting user behaviour at various levels of burning.

Binance have now set the president with a tax rate of < 0.1% by burning normal member transactions that are taxed at 0.1 and VIP transactions at a much lower rate.

A tax rate of 0.2% will surely suppress spot trading volumes, and is therefore not proposed as LUNC trading should not affect CEX profits.


The proposal is therefore to:

  • Set the tax parameter at 0.1%, which would hypothetically restore the on-chain transaction volume,
  • Request CEXs to add a 0.1% tax fee for off-chain spot trading. CEX implementation of the tax burn should be 0.1% on coin sales, and not on purchases, as we want to encourage purchases instead of sales.

The community has already accepted that the road to recovery will be longer and burning the supply down to 10-Billion will not happen overnight. However, we need to keep momentum by updating the tax parameter sooner rather than later. Rome was not built in a day, and sometimes the best course of action is to address one issue at a time, and this is the lowest hanging fruit.


We need to put pressure on other CEXs to implement a off chaine tax otherwise Binance will give up…

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Agreed. But we need to propose a suitable tax rate otherwise they will not accept it