- Terra Classic’s Proposal 12114 seeks to redirect 10% of the LUNC burn tax to the Oracle Pool, aiming to enhance long-term staking rewards.
- Despite strong support from smaller validators, the proposal faces challenges reaching the voting threshold due to abstentions from major validators like Allnodes, highlighting a critical juncture in the community’s governance.
The Terra Classic community is currently engaged in a pivotal vote on Proposal 12114, a measure set to revise the allocation of the LUNC burn tax. This proposal seeks to allocate 10% of the burn tax to the Oracle Pool, thereby enhancing long-term staking rewards. As the voting period nears its conclusion, the proposal has gained substantial support from smaller validators but has yet to achieve the necessary voting threshold due to significant abstentions from major validators, including Allnodes.
A Brief History: Proposals 12098 and 12114
Proposal 12114 builds on the foundation of an earlier proposal, 12098, which was introduced by community member StrathCole in April. Although initially supported by the community, Proposal 12098 did not enact any immediate changes. The proposal suggested maintaining the current burn tax rate of 0.5%, with 80% allocated for burning and the remaining 20% split between the Terra Classic Community Pool and rewards. However, it introduced a key amendment: redirecting 10% of the burn tax to the Oracle Pool, which would be used to enhance staking rewards.
The community previously showed strong support for Proposal 12098, with a decisive majority favoring its approval in a vote held two months ago. Building on this momentum, former L1 Joint Task Force developer Frag introduced Proposal 12114 to implement the changes detailed in Proposal 12098.
Community Response and Challenges
Despite the proposal’s logical benefits, its approval has been hindered by the abstentions of major validators like Allnodes, which holds 14.66% of the voting power. Currently, only 25 validators have cast their votes, with 24 voting in favor and one abstaining. This shows strong support from smaller validators, yet the proposal’s success hinges on broader participation from the community.
One notable supporter is Christopher, a prominent community member who operates the JESUSisLORD validator. He has publicly endorsed Proposal 12114, emphasizing the importance of funding the Oracle Pool. Christopher has pointed out that the Oracle Pool currently lacks a dedicated funding source and is being depleted. He argues that redirecting 10% of the burn tax to this pool is crucial for sustaining long-term staking rewards, even though this adjustment might slightly reduce the APR.
Potential Impacts and Technical Adjustments
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 and reduce reliance on block rewards that currently incorporate gas fees. While this adjustment is expected to decrease the annual percentage rate (APR) of staking rewards by approximately 0.5%, it promises long-term benefits for the stability of the Terra Classic ecosystem.
To implement these changes, L1 coding is required, introducing a new “oracle_tax” parameter similar to the existing “community_tax” parameter. This technical adjustment is essential to facilitate the proposed shift in tax allocation.
As the voting period for Proposal 12114 draws to a close, the Terra Classic community stands at a critical juncture. The decision will not only affect the distribution of the burn tax but also shape the long-term sustainability and stability of staking rewards within the Terra Classic ecosystem. With LUNC currently trading at $0.00009862, amid a 6.3% drop over the last 24 hours, the outcome of this vote could play a significant role in the future trajectory of the cryptocurrency.
