Refactor Burn AnteHandler and deprecate Seigniorage Reward Policy

Every epoch (approximately 7 days), the treasury module records the total supply of LUNC and subtracts that from the previous supply of LUNC 7 days ago. This is the number of LUNC burned within that week. This module was originally purposed around the market swaps (burning LUNC < > minting USTC, and minting LUNC < > burning USTC), and a portion of the burned LUNC is re-minted at the end of the epoch as seigniorage which is sent to the community pool. Community pool funds must be voted on by governance for distribution. The seigniorage is currently set to 10%.

There are many factors that affect the total supply of tokens in the system. There is the on-chain tax (0.2%), there are token inflation parameters (currently 0%), seigniorage (10%), market swaps (disabled for LUNC/USTC, enabled for USTC/Other stables 0.35% tobin tax), pre-determined vesting schedules, and there are voluntary burns, like the one Binance and other members/validators have been generously contributing.

Efforts by the community utilize the RewardPolicy parameter change in order to capitalize the chain and fund the community pool. In consultation with members of the community and Binance, it is clear that the co-mingling of voluntary burns with the seigniorage remint policy is confusing at best, and undesirable for others.

This is a signaling proposal that seeks to deprecate the use of RewardPolicy for the purposes of funding the community pool. It is proposed that core code changes are implemented to the burn antehandler to achieve the same effect as seigniorage RewardPolicy, but would directly be coded in the on-chain burn tax.

For example, in the current implementation, an on-chain transaction is taxed at a rate of 0.2% of the total amount. This tax is immediately sent to the burn wallet. At the end of the epoch (7 days), the amount re-minted (which includes the on-chain tax, voluntary burns, etc.) is calculated by the reward policy, and that percent is sent to the community pool.

In the new proposed model, the RewardPolicy should be set to 0.0 (no seigniorage remint). The on-chain transaction is taxed at a rate of 0.2% of the total amount. Instead of sending it all to the burn wallet, the tax is immediately split 50/50 and half is sent to the burn wallet, and half is sent immediately to the community pool. Thus, the only amount contributed to the community pool is via the on-chain tax and there is no minting happening at the end of the epoch. The 50/50 split is currently proposed (as I believe it is consistent in spirit to #5234, #10983, and #11111 see below), and would be hard coded into the burn antehandler. It could not be changed by parameterization (the overall tax rate of 0.2% is still a parameter change). The manual/voluntary burns remain “untouched”.

Note about passed proposal #5234

This was the governance proposal that first introduced the RewardPolicy upgrade to 10%. As shown in the first figure, this proposal reminted approximately 190M in a week, given the inclusion of the Binance burn. Without the Binance burn, this would have been reduced to 65M in a week.

Note about passed proposal #10983

Given the passing of this proposal, the RewardPolicy was adjusted to 50%, and this is where it currently is now. As shown above, the 50% split re-minted approximately 200M in a week, without Binance burns. Whether or not this was intentional by the proposer, this amount is approximately equal to the 10% RewardPolicy with Binance burns.

Note about passed proposal #11111

A new proposal repeals 10983, and brings back the RewardPolicy to 10%. The amount of weekly community pool contributions would be back to the same amount only if Binance continues to burn.

Parameter justification in this proposal

This proposal 50/50 split maintains the same level of contribution to the community pool as (5234, 11111 (if calculated using Binance burn contributions)), and (10983, calculated without Binance burn contributions) while keeping manual/voluntary burns out of the equation - in the range of 200M to 300M depending on volume. In essence, we believe this governance proposal maintains the spirit of all three passed proposals.

By voting YES, you agree that the burn mechanism should be refactored in this way. There will be at least 2 more governance proposals that follow, one to set the RewardPolicy to 0.0, and another to review the code, and accept the implementation on the blockchain. Subsequent parameter proposals that attempt to adjust the RewardPolicy greater than 0 should be voted No with Veto without proper justification.

By voting NO, you are indicating that the current mechanisms of the burn antehandler and seigniorage RewardPolicy are acceptable as currently implemented.

For this Agora post, we would appreciate any comments or suggestions. If you could please justify suggested changes with data/models, that would be particularly impactful. Please note that this code adjustment would be scheduled in the next release, and thus will not likely go to vote for at least another several weeks. Special thanks for the discussion with


Yes! Let’s do it!


I have personally submitted a proposal speaking against re-minting more LUNC. I completely agree that we should change the parameters so that no minting would occur. I agree that the tax should purely be used for burning as well as funding the community pool. What I disagree with is the 50/50 split. I believe that 50% going toward the community pool is too much, even now during a bear market. For example if the Luna Classic mcap increased 10x and 50% was going directly to the community pool, that is wasted burn potential. 50% even now is a lot of money going to the community pool, but even more so during a bull season. I agree with this proposal idea, but not a 50/50 split. My suggestion would be an 80/20 split. (80% to be burned) and (20% for the community pool). I believe this would be sufficient to fund the devs/teams working on the project.


I strongly support this. Godspeed.


I disagree with 50-50 split, we need more burns!


i disagree with 50-50 split,too much for community pool; most of it should go to burn. we should burn 70 percent max


I vote yes. This is a hardcoded proposal meaning it will not be changed in future if I am not mistaken. So if we put 50/50 now, it will be good. We see it as too much because binance currently burns. What if they stop? Remember we can’t change it in future. It is hardcoded. 50/50 is good for me. Besides, re-pegging USTC will not pay for itself if I am not mistaken.

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@ek826 , I think a lot of people are confused but if you can just clarify , if i understand correctly with this code change the voluntary burns are burned at 100% and just the 0.2% burn tax is split 50/50 burn/CP (only the on chain volume) ?

This should be the middle ground that makes everyone happy.


You are acting like a child, man you are a validator ask your community first then vote


I think the best is split 60/40. Burn60% and community pool 40%

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Onchain burns 50/50 voluntary burns eg binance and community burns witll be burnt in full 100%


Thanks Ed,

If I understand this correctly, your proposal is saying the following:

  1. Even though the current reminting is nothing more than the mechanics under the current process of moving an agreed allocation of “burnt” coins into the Community Pool, no one like to see a green bar once a week.

  2. You assume that the majority of the community, through the 3 proposals mentioned, do want to fund the Community Pool, to a certain extent (below), but that this is not the case for some / all of the off-chain burning activities e.g. Binance. This would make sense as Binance has always stated that a token community can only dictate what is done on-chain and not off-chain. What is done off-chain is entirely at the discretion of the relevant off-chain activity.

  3. I’ve not checked your math and will assume you are correct, but you are stating that each of the 3 prior proposals mentioned equates to, approximately, a desire to allocate 50% of the current on-chain burn activity to the Community Pool, noting that the other 50% on-chain burn plus all of-chain burn would be truly burned.

  4. Thus, by implementing your proposal we would be i) getting rid of the re-minting phenomenon; ii) appeasing the off-chain community and de-risking any change in policy from that area (mainly Binance); and iii) contributing to the Community Pool an amount at least on par to that proposed in the various prior proposals listed, and keeping the development of our business/blockchain going for the foreseeable future.

Assuming I am correct in my understanding this sound like a Win! Win! Win!


I support this, will vote yes.


I like it. So my vote is Yes


Hey Ed just wanted to clarify 2 things.

by yes:

“There will be at least 2 more governance proposals that follow, one to set the RewardPolicy to 0.0, and another to review the code, and accept the implementation on the blockchain.”

You mean to say that reward policy rate will be set to 1.0 or 0.0?

For context:
Back with the param change for the 1.2% you had a paragraph that said this when there was 100% burns and no remint:
“Furthermore, the “change rate max” will be set to 0.0, preventing the tax rate from changing over epochs (approximately a week) of the blockchain. The reward policy “rate min” and “rate max” will be set to 1.0, with a “change rate max” set to 0.0. The reward policy specifies how much of this should be burned, and how much should be distributed. 1.0 or 100% indicates that all of the newly minted Luna should immediately be burned and not distributed.”

Also can you disclose what Binance has said either directly or paraphrasing?
That is a major factor here and it’s important for us to know if they are just supporting the community (fine with reminting) or if they have indicated the burns will stop unless the feature is removed?

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We should change the parameters so that no minting will ever occur. I disagree with the 50/50 split as 50% to CP is too much. My suggestion would be a time limited 70/30 split (Burn/CP) and at a later time a move to 90/10 as the price of LUNC increases. The Blockchain is in debt. Spending must be minimized, burning maximized. The Burn Tax(BT) therefore must be increased. This proposal is a good start but is lacking a clear statement on intentions to raise the BT. This is a real concern because there are Validators that are against the BT and continually minimize it. They seem to believe that they are smarter than community members. A majority of the community has clearly seen that .2% BT doesn’t work and have asked their validators to support a BT of between .5% to 1.2%. (100 Million to 600 Million per day) Although it would be inappropriate to deal with the BT in this proposal it needs to be addressed. e.g. “The L1 team will put forth a proposal to raise the BT to ______% within 15 days of this proposal.” It would be unwise to decide on the parameters of this proposal (The Split) without first knowing where the BT is going to be in 30 days. The community is mature enough to know the reality that we need some serious burning to be done. 2.5 Billion/Day is a reachable target that we need to see commitment on. Please provide this additional information so the community has the ability to make an informed decision. To the writer: Thank you very much for your hard work on this. It is appreciated very much.


I think you’ve misunderstood the proposal. If an investor/validator/ binance sends an amount to the wallet, the full amount is burned minus the 0.2% tax. Of that 0.2%, 50% goes to the burn wallet and 50% goes to the CP.

What was happening before #11111, was a transaction going to the burn wallet and 50% of the entire transaction was being reminted to the CP. With #11111, only 10% of the entire transaction is being reminted to the CP.

This new proposal is going to burn fast more lunc than #11111

Hope that helps


I’m not sure about this alot of people have an issue with burned coins not being burned.
We also need to find a sustainability way of generating funds for development, so i’m on the fence here.
Where do Binance stand with a portion of their funds being sent to the community pool, CZ always encorages building?

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I don’t agree with 50/50 split for the on-chain burn tax. It is excessive. It should be 90% burn 10% community pool. If the on-chain tax is raised say for example 1.2% do we really need 0.6% to the community pool? An oversupply in the community pool has it’s own issues. We need to focus on burning. The community just voted for a 90/10% split, why now propose 50/50. Disappointing.


No. Not 50/50 split thats going back again. It should be 90/10 as agreed in new passed prop 11111.
Please revise.