The author of the  LUNC 1.2% Tax Burn Proposal Explains Why He Agrees to Reduce the Tax

Terra LUNC Community Approves New Measure to Reduce Tax Burn
Terra LUNC Community Approves New Measure to Reduce Tax Burn

Author of the 1.2% tax burn proposal for Terra Classic (LUNC) votes in favour of the tax reduction. 

Edward Kim, a core developer for Terra Classic, revealed on Twitter on Friday that he had voted in favour of Proposition 5234, which would have reduced the tax to 0.2% and given 10% to the community fund, which the neighbourhood could utilise to encourage chain development.

Edward Kim acknowledges that he is unsure of what will occur whether the tax is increased or decreased.

How Kim Made His Decision About the Tax Burn

According to the blog post, Kim divided the most recent community plan into 2 to help him decide. Kim first suggests allocating 10% of the tax to the neighbourhood pool. 

According to the developer, this amounted to minting 10% of the tax revenue at the beginning of each new era for the community pool while burning 100% of the tax revenue after the previous epoch (7 days for the LUNC chain). Kim stresses the need to support the neighbourhood pool and agrees with this plan aspect.

“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.”

Second, the core developer questions whether a reduction in tax from 1.2% to 0.2% is necessary, unnecessary, or premature. Here, Kim offers some explanations. For instance, he acknowledges that reducing the burn tax option does not guarantee that on-chain volume would resume. 

He also acknowledges that the existing data from regression analysis does not suggest an increase in on-chain volume with the current parameter any time soon.

“I am admitting that I do not know, and thus I believe exploration at this stage is more important than exploitation,” Kim writes.

Kim Encourages Others to do Research Before Making Decision

However, when the result of a given choice is uncertain, machine learning optimisation principles eventually guide his choice. 

Both of these concepts convince him that changing the tax is not too early or too great of a jump, even if he believes that giant leaps should be encouraged during an exploratory period.

“After weighing all the data, reflecting on what I know and recognising what I don’t know, I voted yes to proposition 5234,” the developer wrote. Notably, he urges others to conduct research before making a choice.

It is important to note that Kim was the author of the most recent burn tax parameter, which was 1.2% and generated a lot of buzz in the community.

But after almost 24 days of implementation, it hasn’t performed as intended, mainly because of lower on-chain volumes. 

As a result, calls for the tax to be decreased have gained momentum, ultimately leading to proposal 5234 by Akujiro and Duncan Day. The tax has already burned up six billion LUNC.