A proposal to further increase the LUNC burning rate has gained heavy support.
The Terra community has been working hard to come up with viable options to save the ecosystem, especially with respect to LUNC (Luna Classic). While Terra founder Do Kwon and his TFL team haven’t shown much concern for LUNC and UST since they launched Terra 2.0, the community is still concerned.
Various proposals have been put forward, with the latest ones focusing on burning LUNC to reduce supply and prop up the price.
A recent proposal suggested that 1.2% of all LUNC transactions should be burned. This proposal has since been successfully passed with an overwhelming 83% YES votes. Another new proposal has been put forward further to burn 50% of all LUNC transaction fees. Notably, this will differ from the previous 1.2% burn that targeted transactions themselves as opposed to transaction fees.
Burn Mechanism Not On Exchanges
It’s worth noting that the 50% burn on transaction fees will not be implanted on exchanges as opposed to the 1.2% burn on all transactions everywhere. This is because the transaction fees can only be deducted from the Terra native chain.
According to the proposal, out of the 50% transaction fees in question, 35% will be burned via community pools every month, and 10% will be used to fund Terra devs. In comparison, the remaining 5% will be retained to support the development of Terra Classic core systems. Proposer rewards will also be increased.
The proposal says:
“Distribute 50% transaction fees to the community pool (35% to be burned via monthly community pool proposals; 10% airdropped to ecosystem devs, 5% retained for core Terra Classic development) and increase ‘Base Proposer’ and ‘Bonus Proposer’ reward from 0.01 and 0.04 to 0.03 and 0.12 respectively.”
At the time of this writing, the new proposal records 93.2%, with 77.4 million LUNA committed in support from voters. Only about 0.3% voted NO, with just about 245,751 LUNA committed. Roughly 6.4% abstained from the vote with 5.2 million LUNA. The voting deadline is set for Wednesday, 15th, 2022.
Why Is LUNC Being Burned?
The collapse of Terra led to trillions of new LUNA tokens being minted. UST lost its USD peg while LUNA (now LUNC) price dipped below zero. Since then, the community has sought ways to reduce the supply. Currently, there are around 7 trillion LUNC. This supply is too much for a troubled coin. The burning mechanisms are meant to minimize this supply and trigger the market forces of demand to increase the price.
At the time of writing, the new proposal records 93% support from voters, with the voting deadline set for Wednesday 15th, 2022.