Terra Classic Community Considers 5x Increase In Gas Fees

The proposal aims to increase funds sent to the community pool to fund development.

The Terra Classic community has begun voting on Proposal 11243, which seeks to increase LUNC gas fees by up to five times. The proposal is the second part of a more significant proposition created three days ago, which suggested that the community deprecate the Seigniorage Reward Policy, thereby stopping the reminting of 10% of already-burned tokens.

Details of the Proposal

The original proposition, as submitted by anonymous community member Dfunk, highlighted the motivation behind the motion. One of the factors is the drastic decrease in the on-chain burn rate within the past four weeks. This decrease will likely be further exacerbated by Binance’s decision to reduce their burns. As burns decrease, so do funds realized from the Seigniorage Reward Policy.

Approximately 100M LUNC tokens have been reminted and sent to the community pool in the past four weeks from the 1B LUNC tokens burned within the same time frame. This is based on the current 10% Seigniorage Reward Policy rate. 

At the same time, the network registered 2B LUNC in transaction fees in the past 4 weeks. Out of this value, 1B – representing 50% of the community tax – has been sent to the community pool. This indicates that the community pool generates more funds from transaction fees than the Seigniorage Reward Policy.

While the proposal seeks to eliminate the Seigniorage Reward Policy, it is looking to make up for the decrease in community pool funds by increasing transaction fees by 5x. This should send more funds to the community pool. Proposal 11243 addresses the second part – the need to increase the fees.

Current Status of the Proposal 

The proposal was submitted 19 hours ago, and has so far been voted by eight validators as of press time. Out of the 8 validators, 7 voted “Yes,” while 1 validator voted “No with veto.” Crypto King, LUNC influencer and operator of the Burn and Build validator, launched a Twitter poll today to get the opinions of his delegators before voting on the proposal.

Increase $LUNC gas fees by 5x to fund oracle pool to sustain staking rewards.

(this will increase staking rewards, and $LUNC will still be competitive with other blockchains)

See proposal: https://t.co/Dd2FxNPg11

— Crypto King ? (@CryptoKing_NFT) January 4, 2023

Out of 1,136 respondents at the time of reporting, 73% have voted “Yes,” while 20% have voted “No.” 7% of the respondents have abstained from voting. The community has 12 hours more to respond to the poll. Likely, the poll results will determine Crypto King’s Burn and Build validator’s vote on the proposal. The validator has 0.95% voting power. Top validators such as Allnodes and LUNCDAO have also not voted.