Reduce UST Tobin Tax from 0.35% to 0.035%


The UST Tobin Tax of 0.35% is very high, compare to the trading cost of most exchanges for efficient arbitrage.

Proposal is to significantly reduce the UST Tobin Tax to 0.035%.


An efficient arbitrage mechanism is needed for UST to keep peg with other USD stable coins.


The UST has lost peg to other USD stablecoins on May 8th, 2022.

Market tried to recover peg, but failed twice, and the rate stabilized between $0.9955 and $0.9965.

The 0.35% tax rate is a key reason that prevents effective market arbitrage, and makes it costly to restore peg.

The trading cost for most active exchange are all lower than 0.1%. Depend on the trading volume of the trader, it gets further discount. E.g. Binance has 0.075% trading fee for regular user, which can be reduced to 0.015% for high volume traders.

The Terra Tobin Tax of 0.35% is huge compared to exchange with efficient fees.

Would propose reduce Terra Tobin Tax from 0.35% to between 0.01% and 0.05%

The Terra Tobin Tax will need to be on par or below other exchange trading fees, to promote efficient arbitrage (not significantly higher)

Otherwise, the community could continue to see peg loss. These peg loss will be hard to recover, due to the Tobin Tax.