J Feng 🌕

I can’t agree with this. Utility and burns are not in conflict. Of course LUNC needs more utility, but keeping the tax low has not brought volume back either. We already reduced it, so where is the new activity? I also don’t understand why people assume that raising the tax from 0.5% to 1.5% would suddenly make users leave, dump LUNC or short it. That doesn’t make sense to me. People use something because they need it or because it gives them value. A 1% difference is not the reason a chain succeeds or fails. Where I live, we pay 13% sales tax on most things. Other places only pay 5%, but I don’t know many people who move somewhere else just because of the tax. The burn tax also represents our commitment to reducing the supply. LUNC has a huge supply problem. If the burn rate is so low that it makes almost no difference, then what is the point? I agree that utility is important. But utility and burns should happen together. We should build more, create more reasons to use the chain, and at the same time show that we are serious about reducing supply. For me, 0.5% is almost meaningless. I think 1.5% is reasonable, with 1.2% burned.

This is not an abstract theoretical debate. It is a question of understanding basic economics and what actually happened on Terra Classic. You said: “Tax forces transactions off-chain.” A tax can affect the cost of certain high-frequency trades, arbitrage and market-making activity. But transactions do not happen simply because a tax is low. People transact because they have a reason to transact: useful applications, demand, liquidity, arbitrage opportunities or the possibility of earning a profit. Nobody wakes up and makes transactions for no reason simply because the tax is lower. The fundamental reason Terra Classic lacks on-chain volume is that we do not currently have enough meaningful applications, profitable opportunities or products that people genuinely want to use. Removing the tax does not automatically create any of those things. You then said: “It’s cheaper to trade LUNC on Binance.” Trade it for what purpose? Short-term traders and speculators already use centralized exchanges because that is where the liquidity and order books are. They are buying and selling LUNC based on price movements. That is not the same thing as genuine on-chain economic activity. People do not move on-chain simply to trade for the sake of trading. They move on-chain when there is something useful or profitable to do there. You also said: “There is no money validating the chain unless you’re in the top three.” That is simply not true. Burrito Node is currently around 13th in voting power. It earns approximately $150 per month in LUNC and USTC. I do not sell those rewards; I compound them because I view them as a long-term investment. Whether a validator is profitable depends on delegation, commission, operating costs, token value and overall network activity. It has no direct connection to whether the burn tax exists. You then said: “People are losing interest as compounding losses is not the best business model.” Of course people lose interest when an asset keeps falling and they are losing money. That is true throughout crypto and traditional markets. But again, that does not prove that the burn tax caused those losses. Low prices, weak demand, limited development and the absence of useful products are much larger issues than the transaction tax. Finally, you said: “We have had the tax for five years.” No, we have not. The original 1.2% burn proposal was approved in 2022, and the tax was implemented on-chain on September 21, 2022. That is not five years. I have been part of Terra Classic since the chain was created after the collapse. I remember every stage of its history. After the collapse, the chain was effectively abandoned and the community was in chaos. Community developers and contributors, including Edward Kim, Zaradar and others associated with Terra Rebels, worked with validators to restore and upgrade the chain. The recovery work included both implementing the community-approved 1.2% burn mechanism and re-enabling delegation and staking. These proposals gave validators, developers and the wider community a common objective at a time when the chain had almost no direction. The burn movement helped reunite the community. It encouraged validators to coordinate upgrades, brought holders back on-chain, restored public attention and helped attract support from major exchanges. Binance later began burning the trading fees generated from its LUNC spot and margin pairs. You can debate whether 1.2% was the ideal rate. You can propose reducing it, changing it or replacing it with a better mechanism. Governance exists precisely for that reason. But rewriting the chain’s history and blaming every current problem on the burn tax is not a serious analysis. Terra Classic does need more on-chain volume. But volume comes from utility, applications, liquidity and opportunities—not merely from reducing a tax and hoping people begin making meaningless transactions. Build something people want to use, and transactions will follow.