Terra Classic Nears Decision: Proposal 12114 to Redefine Burn Tax Allocation

By Crypto News Flash
about 1 month ago
  • The Terra Classic community is voting on Proposal 12114 which aims to revise the LUNC burn tax to allocate 10% to the Oracle Pool, enhancing long-term staking rewards.
  • While Proposal 12114 has garnered strong support from smaller validators, it has yet to reach the voting threshold due to abstentions from major validators such as Allnodes.

The Terra Classic community is currently in the midst of a crucial vote concerning Proposal 12098, which aims to revise the LUNC burn tax to finance the Oracle pool.

Originally proposed by StrathCole in April, Proposal 12098 was initially endorsed by the community as an expression of support, though it did not enact any changes at the time.

The proposal suggests maintaining the current burn tax rate of 0.5%, with 80% allocated for burning and the remaining 20% split between distribution to the Terra Classic Community Pool and rewards, per the Crypto News Flash report. These percentages are influenced by block proposer rewards, which are set to phase out with the SDK 0.47 upgrade.

StrathCole’s amendment aims to redistribute the burn tax, allocating 80% to burning, 10% to the Community Pool, and another 10% to the Oracle Pool instead of rewards. This adjustment seeks to achieve a fairer distribution of the tax, ensuring that block rewards exclusively come from gas fees.

Additionally, redirecting the tax to staking rewards through the Oracle Pool could potentially enhance the system’s stability. The Terra Classic community previously showed strong support for Proposal 12098, with a decisive majority favoring its approval in a vote held two months ago.

Terra Classic Proposal 12114

Building on the foundation laid by Proposal 12098, former L1 Joint Task Force developer Frag introduced Proposal 12114, which aims to implement the changes detailed in the earlier proposal.

Submitted on June 9, Proposal 12114’s voting period will conclude in three days. As of now, it has not reached the necessary voting threshold for approval, primarily due to abstentions from major validators, including Allnodes, which holds 14.66% of the voting power.

Despite the hesitance from larger validators, some smaller validators have shown strong support. Of the 25 validators who have cast their votes, 24 have voted in favor, with one abstaining. This indicates significant backing from a portion of the community, though the proposal’s success hinges on broader participation.

One notable supporter is Terra Classic community member Christopher, who runs the JESUSisLORD validator. He endorsed Proposal 12114 on social media, emphasizing the importance of funding the Oracle Pool. Christopher highlighted that the Oracle Pool currently lacks a funding source and is being depleted. He argued that directing 10% of the burn tax to this pool is crucial for long-term staking rewards. Although this change might slightly reduce the APR, he believes the long-term benefits outweigh this drawback.

Here’s What the Proposal Change Brings

The proposed changes aim to streamline the rewards system and ensure a fairer distribution of the burn tax. By allocating 10% of the tax to the Oracle Pool, the proposal seeks to strengthen long-term staking rewards, reducing reliance on block rewards that currently incorporate gas fees.

This adjustment is expected to decrease the annual percentage rate (APR) of staking rewards by approximately 0.5%. Additionally, the change necessitates L1 coding, as it cannot be implemented through simple parameter modifications. Introducing a new “oracle_tax” parameter, similar to the existing “community_tax” parameter, is essential to facilitate this shift.

Currently, LUNC is trading at $0.00009862, having recently fallen below the $0.0001 threshold amid a 6.3% drop over the last 24 hours, per the Crypto News Flash report.

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