Voting Goes Live For Protocol Level Terra Classic DEX

A proposal to launch a protocol-level DEX to generate revenue for the Terra Classic network is now live for voting.

Proposal 11049, a proposal to build a decentralized exchange that will generate revenue for the Terra Classic network and help burn Terra Luna Classic (LUNC), is now up for voting, as disclosed by community influencer Classy (@ClassyCrypto_) in a tweet yesterday.

Proposal 11049 to create a $LUNC Community DEX is now live. pic.twitter.com/gWNDNl7EYl

— Classy ? (@ClassyCrypto_) December 11, 2022

Asobs (@Asobs_CNG), another community influencer, confirmed it earlier today. As highlighted by Asobs, the proposes are requesting community pool funding to build a DEX that will obtain liquidity from the Oracle pool. Consequently, transaction fees received will go to the network, and proposers suggest that these fees are split between replenishing the Oracle pool, funding the community pool, and reducing the LUNC supply.

?Breaking News?

Proposal 11049 is LIVE for voting!

The proposal aims to use $LUNC from the community pool to develop a DEX. Then use #LUNC from the oracle pool to provide liquidity for the DEX.

What do you think of this prop??

It could fund the oracle pool/ BURN $LUNC ? pic.twitter.com/y6g3xNiCmo

— Asobs (@Asobs_CNG) December 12, 2022

It bears mentioning that the proposers are yet to decide the percentage allocation of these fees to the three locations outlined. However, per the proposal, the community will decide on these parameters in a future governance proposal.

Notably, the developers also plan to include pairs other than LUNC/USTC and will support LUNA and ATOM. While it clarifies that it is not looking to become an Osmosis competitor or push users to LUNA, it believes these additions are necessary, recalling that LUNC holders received LUNA tokens in airdrops.

Additionally, in the spirit of innovation, developers plan to expose users to indices as part of what they call Terra Indices. It will allow users to swap LUNC or any other supported tokens for an index token that will always have a portion of LUNC, with proposers giving an example of a LUNC and LUNA Index with a composite weight of 50% LUNC and 50% LUNA. It provides an interesting way for users to diversify their exposure.

The proposers emphasize that no new LUNC will be minted. Instead, when users obtain an index token, LUNC is burnt in fees. The portion of LUNC tokens that the index represents is kept aside until it is redeemed, effectively reducing the circulating supply. The only thing minted is the index token per the proposal.

Furthermore, developers plan to provide an opportunity for the network to profit from arbitrage opportunities with flash loans. The proposers estimate that the DEX will generate about $40k per day for the network in fees from the LUNC/USTC pair alone, citing a simulation of how the DEX will operate using SHIB/WETH. 

However, all of these come at a cost. The proposers, who claim to be a three-person team of 2 senior developers and one senior quantitative analyst, are requesting 825 million LUNC (~$125k)in total, with the option for an extra 825 million  LUNC in bonuses if the DEX meets certain performance criteria.

Notably, the developers plan to request funding in batches to allow the community to see results before moving on to subsequent stages of development. In the first community spend proposal, which is currently up for voting, the team requests 330 million LUNC (~$50k). It will cover the cost of building the basic DEX without flash loans and indices features.

Community members are excited by the proposal of a DEX. As previously reported, a DEX had ranked high among projects Terra Classic community members want to see on the network.