Fatman describes the latest LUNC tax proposal as worse than the burn tax parameter and authoritarian.

In a tweet on Friday, famous Terra whistleblower FatMan criticized the latest community proposal to reduce the tax burn parameter to 0.2% and allocate 10% of the tax to the community pool for development as authoritarian.

“Giving 10% of the tax to yourself is an even worse idea than the burn tax,” tweets FatMan. “Devs absolutely deserve to be paid – either through donations or via formal community pool spend proposals – but automatically redirecting 10% of every burn to “contributors” is authoritarian & wrong.”

Giving 10% of the tax to yourself is an even worse idea than the burn tax. Devs absolutely deserve to be paid – either through donations or via formal community pool spend proposals – but automatically redirecting 10% of every burn to "contributors" is authoritarian & wrong.

— FatMan (@FatManTerra) October 14, 2022

FatMan believes that the Terra Classic chain should abandon the tax and mandatory donations and focus on providing utility and attracting decentralized applications (DApps).

The Terra Rebels Respond

Unsurprisingly, the comments by FatMan have attracted a lot of attention and responses from key members of the Terra Rebels.

For example, Edward Kim clarified that funds allocated to the community pool must still pass a governance vote to be distributed. Consequently, Terra Rebels do not have free access or a claim to the pool.

Let me clarify, it goes to the community pool and must be voted on via governance for distribution

— Edward Kim (@edk208) October 14, 2022

Meanwhile, Alex Forshaw described the comments by FatMan as unfair, as he asserted that a community-owned pool to fund developments is the only option left under the status quo. Notably, Forshaw challenged FatMan to propose an alternative.

You make many intelligent criticisms but this one is not fair

— 4lex_4sh4w_TR (@4lex_4sh4w_TR) October 14, 2022

Furthermore, StrathCole emphasizes Kim’s point highlighting that each spend has to go through a governance vote. In addition, he notes that even if the proposer explicitly stated that the 10% should be reserved for developers, it is not what the proposal achieves at the end of the day. 

Notably, none of the Terra Classic developers were involved in writing the proposal in question – proposal 5234.

Each spend of the pool will have to pass governance. So I don't see the problem here. Even if the proposer would have indicated it should be used for devs, this is not what the proposal decides or has as effect.
And nine of the devs (afaik) wrote that proposal.

— StrathCole (@ColeStrathclyde) October 14, 2022

It bears mentioning that proposal 5234 comes as the current 1.2% tax parameter has failed to meet expectations. It hopes to attract on-chain volume lost since the 1.2% tax implementation and provide a means for sustainable chain development.

Notably, the author of the proposal, Duncan Day, in response to FatMan’s concerns, while admitting errors in his writings, confirms that the outcome would be as stated by Kim and Strathmore.

Yes. @FatManTerra, this would be an error in my part on the writing on behalf of Akujiro. It is my first go at these kinds of things, forgive the errors.

However, Ed and StrathCole are correct that the money goes to the community pool. Please read the parameter changes.

— duncan (@wrapped_dday) October 14, 2022

Kim has recently revealed support for the proposal, as reported by The Crypto Basic.

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.