A new governance proposal within the Terra Luna Classic (LUNC) ecosystem has triggered heated debate after supporters accused some opponents of applying double standards to transaction taxes. Proposal #12223 seeks to increase the blockchain’s on-chain transaction tax to 1.5%, with supporters arguing the change would accelerate token burns and strengthen the long-term sustainability of the network.
The proposal has drawn significant opposition from several community members and validators, including LUNCLIVE, which voted “No with veto.” Critics argue that raising transaction taxes could discourage blockchain activity, reduce trading volume, and ultimately harm the ecosystem’s economic competitiveness.
However, supporters of the proposal have responded by questioning whether some of the strongest critics have financial incentives that may influence their positions.
Supporters Highlight WESO’s Existing Tax Model
One of the central arguments raised by supporters focuses on WESO, a separate project within the broader Terra Luna Classic community. According to the proposal’s supporters, WESO’s Litepaper outlines its own transaction tax structure, including a permanent 1.5% swap tax designed to fund project development and maintain market dynamics.
Supporters argue this creates an apparent contradiction. While LUNCLIVE voted against implementing a 1.5% tax on the Terra Luna Classic blockchain, the validator is identified in the WESO Litepaper as one of the project’s founding validators and is allocated a significant share of its initial staking delegations.
Related: LUNC Price Outlook: Why Some Investors Believe Terra Classic’s Biggest Test Is Still Ahead
The same Litepaper also describes considerably higher exit taxes during WESO’s launch phase, beginning at 20.5% during the first month before gradually declining to its long-term 1.5% rate after several months.
Supporters of Proposal #12223 argue these details suggest that transaction taxes are considered acceptable when they directly support individual projects but become controversial when designed to benefit the wider Terra Luna Classic blockchain through token burns.
Governance Debate Centers on Incentives
The discussion has evolved beyond the proposed tax rate itself and into broader questions surrounding governance incentives and validator independence.
Supporters contend that increasing the LUNC transaction tax would strengthen the chain by permanently removing more tokens from circulation through higher burn activity. They argue this could improve the long-term tokenomics of Terra Luna Classic if network usage remains healthy.
Opponents, meanwhile, maintain that higher transaction costs may reduce blockchain activity, discourage users and developers, and negatively impact economic growth. From this perspective, a lower tax environment could encourage greater adoption and offset the benefits of more aggressive token burns.
Related: Terra Classic Burn Reaches 453 Billion LUNC: Can Supply Reduction Change the Future of the Chain?
The governance debate has also extended onto social media, where supporters of the proposal have claimed that several accounts criticizing the tax are actively promoting other tokens or meme coin projects rather than focusing on Terra Luna Classic itself. These claims remain opinions expressed within the community and have not been independently verified.
As voting continues, Proposal #12223 has become one of the more closely watched governance discussions within the Terra Luna Classic ecosystem. Regardless of the outcome, the debate illustrates the ongoing challenge decentralized communities face in balancing tokenomics, network growth, validator incentives, and competing visions for the future of the blockchain.
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