Edward Kim admits he does not know what will happen if the tax remains the same or if it is changed.
In a new medium post shared on Twitter on Friday by Terra Classic core developer Edward Kim, he reveals that he voted yes to proposal 5234, which will reduce the tax to 0.2% while allocating 10% to the community pool, which the community could use to incentivize chain development.
My thoughts on Terra Classic Proposal 5234 https://t.co/gYpPEejNHJ
— Edward Kim (@edk208) October 14, 2022
As per the blog post, Kim broke down the latest community proposal into 2 to make his decision. Firstly, Kim engages the idea of routing 10% of the tax to the community pool. The developer explained that it effectively meant burning 100% of the tax collected at the end of the epoch (7 days for the LUNC chain) and minting 10% of it at the start of the new epoch for the community pool. After highlighting the importance of funding the community pool, Kim declares his support for this part of the proposal.
“A community pool can be used for emergency funds, attracting dApps and projects back to the chain, and paying developers to improve the chain,” wrote Kim. “I vote yes for the 0.9 parameter change.”
Secondly, the core developer interrogates whether a leap from a 1.2% tax to 0.2% is justified, unjustified, or too soon. Here Kim makes several concessions. For example, he admits there is no guarantee that on-chain volume will return if the burn tax parameter is reduced. He also admits that current data using regression analysis does not indicate that on-chain volume will have an uptick anytime soon with the current parameter.
“I am admitting that I do not know, and thus I believe exploration at this stage is more important than exploitation,” Kim writes.
However, what ultimately informs his decision are machine learning optimization principles used when the outcome of a particular choice is unknown. And both principles inform him that it is neither too early to change the tax nor is it too big of a leap, as he asserts that big leaps should be encouraged in a time of exploration.
“After weighing all the data, reflecting on what I know and recognizing what I don’t know, I voted yes to proposition 5234,” wrote the developer. Notably, he encourages others to do their research before making their decision.
It bears mentioning that Kim was the author of the most recent 1.2% burn tax parameter that created much excitement in the community.
However, after nearly 24 days of implementation, it has failed to deliver as expected, largely due to reduced on-chain volumes. Consequently, calls for the tax to be reduced have received new strength, ultimately leading to proposal 5234 by Akujiro and Duncan Day.
Six billion LUNC have been burnt by the tax so far.