Terra Luna Community Divided Over Ongoing Vote to Raise Burn Tax

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As a seasoned analyst with years of experience navigating cryptocurrency markets, I find myself torn between two perspectives in the ongoing Terra Luna community debate over the proposed 1.5% burn tax increase.

The Terra Luna community is using a voting mechanism to consider a proposition about boosting the burn tax from 0.5% to 1.5%. This move could potentially decrease the number of circulating LUNC tokens, leading to an increase in their value and providing additional resources for community-based initiatives. Here’s the breakdown of current data for both LUNC and USTC:

Voting in the Station wallet concerns proposal 12149, titled “Establish an On-Chain Tax Rate of 1.5%.” This proposal aims to elevate the on-chain tax rate from its current level of 0.5% up to 1.5%. However, this increased rate will remain in effect only as long as the total supply of LUNC does not surpass 10 billion LUNC.

The 0.5% LUNC burn tax is divided into 80% and 20%. The 20% is then split equally, with 10% allocated to the community pool and 10% to the oracle pool. If the proposal passes, the new tax rate will allocate 1.2% of the tax to burning tokens, while the remaining 0.3% will go to the Community and Oracle Pools, which fund future developments and provide staking rewards. This change would increase the funds available for these pools, potentially boosting the ecosystem’s growth.

Terra Luna Community Divided as Voting Continues on Impact of Higher Taxes

Many in the community are opposed to the increase, leading to division. Top figures, such as Binance co-founder Changpeng Zhao, have suggested keeping the burn tax low. Others believe it’s time to update the tax rate.

As a crypto investor in Luna Classic, I chose to cast my vote against the proposed increase in the network’s tax rate to 1.5%. My reasoning is simple: I fear such an increase could negatively impact the network by potentially decreasing on-chain activity. The rationale behind this is that higher taxes would lead to increased transaction fees, which may discourage users from engaging in transactions. This decrease in activity could lower the anticipated burn rate, harm market sentiment, and potentially devalue LUNC. Moreover, I’ve seen similar tax hikes fail in the past. In essence, I believe a more moderate approach is necessary for the health of our network and the value of our coins.

Previous attempts at increasing taxes have proven unsuccessful, such as the temporary 1.2% tax that had to be lowered because it negatively impacted the ecosystem… Although burning the supply is crucial, we should prioritize long-term sustainability over immediate burns. Raising taxes might inadvertently deter participation and hinder LUNC’s development.

In a similar vein, another user on X argued that enhancing taxes provides no benefit to the LUNC blockchain. Interestingly, the voting results indicated that approximately 43% of participants favor the tax hike, while 16% are against it. Furthermore, over 41% chose “No with veto,” suggesting a significant divide in opinion among community members regarding this issue.

In the past 24 hours, the value of LUNC has dropped by over 7%, a decline likely due to the overall market slump. Yet, it’s worth noting that there’s been an uptick in LUNC’s trading activity, with the volume surging more than 40% during this period. This suggests that many investors are still actively participating in LUNC transactions as of now.

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2024-12-19 19:48