Do you have a plan to replenish the oracle pool or do you want to just let it fade away?
This proposal encourages high-frequency trading (arbitrage) on CEXs (multiple of whom have agreements with LUNC to burn trading fees) and on-chain (generating fees for the oracle pool).
The oracle pool is only filled by swap fees. Passive income does not fill this pool outside of maybe ~0.05 USTC of burn tax-exempt transactions.
Now that contracts are getting hampered on DEXs and native forex swaps arenāt supported on Station, I wholly expect on-chain volume to decrease from here barring fixes.
The origin of the Oracle pool funds is irrelevant now isnāt it?
Passive income is not utility. Yes, it does matter, because that is where staking rewards are paid from. We cannot replicate this methodology. L2 transactions breaking diminishes your passive income. Setting up an environment for arbitrage, as-is proposed, is a L1 methodology that is the main driver of this blockchain. (Again, āpassive incomeā is a driver of this blockchain, but it is more like unused welfare checks.)
I donāt know why youāre asking me if I have plans to replenish the oracle pool because thatās literally what this proposal does at a higher efficacy than anything else Iāve read to date, and I have read probably a hundred or more different ones from people.
I thought the gas fees go 50% to oracle pool doesnāt this apply to every transaction? I was referring before to the attractiveness of staking with LUNC, especially as price rises will increase on-chain transactions, as people often withdraw rewards daily and if they want to spend them they withdraw to CEX and incur on-chain non-exempt transactions. I donāt know why good staking is not considered utility for LUNC, given it provides staking rewards. That isnāt utility? Whatever you call it, itās a huge draw to the chain. I re-read your proposal and my apologies you did discuss replenishing the oracle pool by the swaps you propose, I forgot that in my later comments. So you want very high volume arbitrage which can be the fuel source for both burns and replenishing the oracle pool. If your idea can be tested, is safe, and doesnāt have extreme risk it would be good. I was thrown off my the premise of your original post that basically LUNC is d-ying and the price is going down and there is no reason to buy it. The price of LUNC going down so much was partially because BTC was going down and because the 1.2% ended after 3 weeks with the promise of huge volumes not resulting and minting/governance chaos which lost community engagement big time. We also nearly lost Binanceās support due to those poor governance decisions in an attempt for funding. Also you mentioned later that if your proposal isnāt accepted LUNC will go to zero. I donāt agree with this at all and it doesnāt help your proposal to state these things. You could do nothing and LUNC would still go up for a variety of reasons. There are numerous USTC related proposals which may take a long time to be tested, verified, have acceptable risk, be communicated simply and clearly enough to be accepted by the community, and finally be implemented without some D-spiral or catastrophic problem hopefully. You see this as an urgent necessity for the chain but I donāt, and we can get along fine without it, and shouldnāt rush into anything like that. But if it can work then good. There is another way to a reduced supply for LUNC, which is good gas/burn tax funding Burns, CP, Oracle Pool, and pushing for CEX adoption again for off-chain buy/sells. The moment we get some bigger level of adoption with that, we will see huge price movement, influx of investors etc. That is completely separate from any USTC re-peg proposal. Anyway Iām not opposed to a proposal like yours if it can be proven to work and is robust, but I think it should be considered long term and we need good short term options in place which I think should be a good burn tax (90 burn/10 CP split), capped CP overflow to burn/OP and as much gas fees as is appropriate when compared to Luna for example. Once we have a good model then something like your idea could be longer term. Itās been 6 months and it doesnāt seem like a re-peg proposal is any closer to happening. We want to be careful to not wind-up getting banned in the US or some legal issues for LUNC, as we pretty much have a clean slate now. Regarding your proposal my thoughts are that the community is not ready to accept this now. Itās too complicated to understand all thatās involved and the possible risks. If you can test the idea thoroughly and it proves successful and you can build support from other trusted individuals, and communicate it well enough then the community could support it. Maybe a proposal for funding to test the idea, but I also donāt know whether the community would go for that at this time, being very sensitive to funding requests. In any case I donāt want to discourage future options like yours if they are not overly risky and have no minting, as they could be good in the long term. I think shorter term LUNC priorities lay elsewhere which is my view.
Also you mentioned later that if your proposal isnāt accepted LUNC will go to zero.
I didnāt say this. Thereās tons of ways to approach this situation, but nearly all of them (all of them) require more money to come into the network. Arbitrage is the baseline demographic beyond staking and arbitrageurs generate a lot of value for themselves and for stakers. The higher the tax value is, the less frequent the arbitrage is likely to be.
I donāt mind other proposals that can potentially bring capital into our market, but a lot of the time itās playing around with the tax rates. That is not bringing new money in, that is affecting existing money on our market. Bad policies will force money out of our market. I believe the 1.2% tax was a bad policy that was near-guaranteed to force capital off the chain, because it just made the chain way too expensive to use for what it offered.
There are numerous USTC related proposals which may take a long time to be tested, verified, have acceptable risk, be communicated simply and clearly enough to be accepted by the community, and finally be implemented without some D-spiral or catastrophic problem hopefully. You see this as an urgent necessity for the chain but I donāt, and we can get along fine without it, and shouldnāt rush into anything like that. But if it can work then good.
There is no urgency because 16 months of risk-free, tax-exempt runway for stakers is an extremely cushy position to be in. Listen, I used to trade on chain (key words: used to), and the policies enacted over time are just forcing me out. Higher fees. Higher taxes. No funding. I have to move money off chain to be a trader, otherwise, the easiest way to make money is to collect the risk-free yield from the pools. If arbitrage bots canāt run it at a high enough frequency, those rewards dry up. External investors donāt have a reason to invest on the chain except for the teams which have barely received funding in the 9 months since the crash.
The moment we get some bigger level of adoption with that, we will see huge price movement, influx of investors etc. That is completely separate from any USTC re-peg proposal.
Itās not going to magically happen. And to be frank, the only reason why Terra Classic is kept alive is because the Terra algo-stables are the product-market fit. If you deprecate the Terra stablecoin suite, we may as well be Luna 2.0. And we all know how people respond to the thought of a potential M&A. (merger and acquisition)
Itās been 6 months and it doesnāt seem like a re-peg proposal is any closer to happening.
There hasnāt been a lot of concerted effort around this. I trade in a larger size than quite a few retail holders (in my experience, this would be 5-6 digits), and Iāll tell you that doing it solo is impossible.
Regarding your proposal my thoughts are that the community is not ready to accept this now. Itās too complicated to understand all thatās involved and the possible risks. If you can test the idea thoroughly and it proves successful and you can build support from other trusted individuals, and communicate it well enough then the community could support it. Maybe a proposal for funding to test the idea, but I also donāt know whether the community would go for that at this time, being very sensitive to funding requests. In any case I donāt want to discourage future options like yours if they are not overly risky and have no minting, as they could be good in the long term. I think shorter term LUNC priorities lay elsewhere which is my view.
Iām actually on the same thought lines as you. Still, Iām not exactly keen to give up on the one thing that makes LUNC, LUNC (Terra, ie, USTC et al). So this will go through discussion phases. If we hit a point where I can fund myself or perhaps another quant team to test this, Iāll put that up for vote.
I appreciate all of your lengthy feedback. Iāll post another discussion soon. Also, please do me a huge solid and use line breaks makes it easier to read for everyone else. Thank you for your feedback again.
I was referring to this comment of yours, where to me it looked like you said that LUNC as-is (without your proposal passing) is going to race to zero. Thatās why earlier in the thread I asked the question to clarify.
I think itāa fair to fund the chain using the existing resources. We are a $1 billion chain, so having reasonable gas/burn fees taken from the users transactions is very acceptable for what we are trying to achieve (burns, CP funding, OP funding). I think thatās standard across other cryptos. Relying on outside funds for core needs of the chain is to me not a good idea, which is why we are still spinning our wheels with no viable proposals implemented yet.
We need something in place now thatās solid and we can adjust the values later if an idea like yours or anotherās works out. Arbitrage trading on this chain is probably only done by a tiny minority of people. I would assume most transactions that bear burn tax/gas fees are from people sending LUNC between wallets, to exchanges, from exchanges to stake, swapping rewards (USTC to LUNC etc.), sending rewards to CEXās. I would say meeting the focus of the majority of the community (as a community run chain) is more important than trying to appeal to the minority who engages in arbitrage, for example.
I disagree regarding 1.2%, as there is some limited movement as a consequence (I was careful of moving my entire holdings at that time), but we only gave the tax 3 weeks. Taxes need to be given time to be received as normal. We pay up to 45% income tax in my country but everyone accepts it like itās nothing. People would have grown accustomed to the 1.2% if it was given a longer run. Also the 1.2% shows the priority which is reducing the supply of LUNC, even at the expense of cheap transaction costs. I believe we should go back to the 1.2%, and failing support for that, at least double our current rate.
Basically I think you see the priority for LUNC to have very cheap transaction costs to encourage arbitrage opportunities for those that do that, and for a later implementation of a USTC related plan. My view is that we need good tax/gas fees now to meet our needs, burning, CP and OP, and later when we get an idea like yours tested and working we can adjust the tax if needed.
I believe having Binanceās support (which came from burning) is a motivator for external investors. I think CEX adoption of an off-chain transaction tax (better than the current 0.1% fee use from Binance), is a huge wild-card for LUNC which if successful would see huge burns and major multiplication of price. By shutting down the 1.2% after 3 weeks we lost our momentum when pressuring the CEXās, so didnāt get to fully explore whether they would do off-chain. We have a success of Binance doing so, but obviously need greater burns to achieve the supply reduction we need.
My view of what is good for LUNC is a good burn tax increase such as 1.2% (leave it for a good time), good gas fees (the recent 5x might be fine otherwise increase if appropriate), exempt the dapps (as was recently proposed), fund CP by 90/10 coded split of burn tax (no mint), CAP on CP with overflow 50/50 to OP and burn, then push CEX off-chain burn adoption again. This is a good plan in my view giving us a good base for 1-2 years.
Then when an idea like yours works out and is acceptable to the community we can adjust the gas/tax to fit the new idea. This letās us push a strong path to price gains and funding for LUNC supported by the community (the community is happy to fund the chain by their transactions), which can be in place for however long we need until an idea like yours is ready. It feels to me if we stay as we are with feeble burns, feeble funding rates to CP and OP, and wait for an idea like yours to be successful, we are pinning all our hopes on that. We have other options which are good and can be adjusted later as needed. Thatās my view. Apologies for the prior text wall. All the best for your idea testing. I think if we got a good base setup and higher funding levels (we only really have just enough for L1 team now), the community would approve a small grant for testing your idea.
makes it easier to read for everyone else. Thank you for your feedback again.