LUNC initiates big changes in burn process and infrastructure development
The Terra community voted in favor of a proposal to reduce the LUNC burning tax to 0.2%. In addition, the community made a positive decision to allocate 10% of the tax revenue to the development of the ecosystem and to pay contributors. A vote in favor of the relevant proposal achieved the required 75% of the votes in the LUNA token.
There were several reasons for such an initiative. The decision follows a significant 91.67% drop in on-chain transaction volume after the initial burn tax was implemented. In addition, there were concerns that LUNC stakers and spot holders were excluded from the process of burning cryptocurrency through the tax and only contributed by sending them directly to “dead” addresses. Moreover, a burn tax in the form in which it exists now would have to work for 20 to 60 years to bring the LUNC supply to the desired supply of 10 billion.
The main reason for the reduction in tax
However, the main reason is zero utilization of tax revenue. According to the proposal, the number of LUNC burns performed by Terra enthusiasts for free does not justify the cost of implementation. The new proposal, on the other hand, implies withdrawal of 10% of tax revenue for infrastructure development and payment of incentives for contributors.
Now that the vote has passed, it remains to be seen what the reaction of the centralized exchanges that introduced the tax will be. The LUNC price has not reacted to the event so far.
