- KuCoin to support Terra Classic network tax burn proposal.
- The asset has been bullish in the last seven days signaling a further upward trajectory.
Crypto exchange KuCoin has announced that it will support the proposal to increase the Tax Burn of Terra Classic (LUNC) Network from 0.2 percent to 0.5 percent when it is launched at Terra Classic block height of 12,902,399. This is part of the four proposals made for a better economic alignment for Terra Classic.
Lately, there has been more focus on increasing LUNC demand through staking. However, there has also been a need to reduce its supply through burn tax, hence, the introduction of this policy.
While financial transaction tax rates of the magnitude of 0.1%-1% have been proposed by normative economists, James Tobin himself suggested a rate of 0.5% in an interview. This shall be raised as a parameter change proposal on the station. Note: The burn tax has been repurposed from the Tobin tax and so apart from increasing the rate to 0.5%, I would also like to recommend changing the name of Burn Tax to Tobin Tax.
The other proposal was to use staking rewards to increase demand through staking. According to the community, it is important to modify the burn AnteHandler to split the “burn tax to the distribution module” rather than burning “AnteHandler to split the burning tax to the community pool.”
The idea is that the distribution module already splits 50 percent of the proceeds with the community pool. When the burning tax with the distribution module is split, stakers would massively benefit and in the long run increase demand for staking and the token LUNC.
Other proposals for Terra Classic
Another proposal is to increase community pool funding to increase developer funding. This proposal is meant to reduce the funds that go to the community pool. In this case, a proposal was made to Burn Tax AnteHandler split from 90/10 to 80/20 to compensate for this.
The final proposal is to increase chain utility and volume by whitelisting smart contracts.
Increasing the Burn Tax is likely to cause a drop in the volume and usage of dapps such as DEXes. In order to compensate for this, I propose to whitelist dapp contracts, such as Terraswap and Astroport from Burn Taxes. This has been discussed in detail here:
[Proposal] Exclude Smart Contraction Transactions from the scope of Burn Tax 55 This should counter any negative effects of increasing the burn tax. A signalling proposal to include this feature in the next release will be raised on station.
It is important to note that the Terra Classic network recently received a new upgrade on May 17 at the Terra Classic block height of 1,812,900. This is to ensure that government-approved features are supported by the blockchain. These include “a minimum initial deposit for governance proposals, Cosmos SDK v0.45.13, Tendermint v0.34.24, and mandatory security updates.”
In the past seven days, Terra Classic has recorded a 9.6 percent surge to trade at $0.000091.
