Decrease the supply cap
First of all, I apologize for my English, I’m using a translator!
I don’t think anyone here knows me, so I’d like to introduce myself. I’m a senior developer with 19 years of experience in programming, mainly in Java and .Net. Like many investors, I lost my entire investment in the crash, but I never stopped believing in LUNC’s potential recovery. I started following the community and decided to study the Terra SDK, Cosmos, Golang, and cw20 Rust. I experimented with a cw20 token, but I needed liquidity, and since I didn’t want buyer interaction, I ended up abandoning the project.
However, I decided to contribute in another way. I began developing a supply limiter to prevent minting above a predefined limit set by governance. I submitted a pull request to the L1 team, who, before merging it into the test branch https://github.com/classic-terra/core/tree/swap-enable, asked me to improve the code and follow some standards. In the meantime, I came up with a way to potentially enable market swaps but with a decreasing limiter in the code. In my example, it’s 30%, but this can be changed via governance.
Before explaining further, I’d like to make a few points:
1 — I’ve always been against any kind of minting. I apologize to those who suggested minting earlier — I was concerned and opposed the idea. However, after thorough research, I realized it’s possible to mint without exceeding a supply cap, and even decrease the supply over time.
2- Any supply limiter needs a margin to allow for exchanges to take place.
3- We need more trading pairs on exchanges, such as LUNC -> axlUSDC and stablecoin -> axlUSDC.
The calculation is very simple, it works, and it’s in my branch: https://github.com/igorv43/core/tree/burn_coin.
We currently have a total supply of 6,841,199,697,902 according to CoinMarketCap. If we set the supply limiter at 6,841,199,697,902 instead of 10 billion as suggested, and reduce the limiter by a percentage for each swap (in my example, it’s 30%), we will burn LUNC while ensuring the supply never increases but gradually decreases. Here’s an example with more precise numbers for clarity:
- Total Supply (TS): 1,000,000
- Max Supply (MS): 1,000,000
- Percentage (P): 0.3 (30%)
- Swap Amount LUNC -> USTC (VT): 100,000
- X = MS — (VT * P) = 970,000
Updated values after the swap:
- TS = 900,000
- MS = 970,000
As you can see, 100,000 LUNC were burned, leaving a supply of 900,000 with a maximum mintable supply of 970,000. This is a security lock, but it decreases over time while allowing for exchanges.
Now let’s say the same buyer swaps USTC for LUNC, possibly with USTC’s value higher than the LUNC they initially traded. They won’t be able to swap everything because it would exceed the max supply. What happens then? Do they lose their money or get stuck? No, nothing like that. The buyer has several options — they can send it to DEXs, CEXs, or trade for axlUSDC.
I did several tests that prove its effectiveness, here are the observations and prints:
Here are some questions and answers:
Why not set the limit at 10 billion?
If you limit it to 10 billion, you can only swap USTC or any other stablecoin once LUNC reaches 10 billion, which I believe will take longer to burn. I prefer to burn more and maintain a safety margin. We also need buy and sell volumes, as there will be high volatility, which significantly increases burns.
Why use a 30% limit?
I think it’s a good margin, but the community can change it — either higher or lower — through governance voting.
What guarantee is there that swaps will happen without re-peg?
I can’t guarantee that, but there are swaps available on DEXs, and arbitrage traders will likely still perform swaps.
Is this feature only for LUNC?
No, it works for all tokens, including LUNC and Terra stablecoins.
Will this bring back the re-peg?
No, this feature is purely to reduce the supply. The re-peg involves other issues that the Quant team is already working on.
How long will it take to reduce the total supply?
I’m not sure — it depends on the number of swaps and volumes — but I’m confident it can happen within 5 years.
Is this alone enough to reopen the swap market?
No, this is just one more feature to safely reduce supply. The decision to reopen swaps will be made by the Quant and L1 teams.
Why develop this without community discussion?
I apologize to everyone for that, but I prefer to see if it works first and prove that it’s viable. This helps reduce some of the debates (like “it won’t work…”).
Why not charge for your work?
I’m just a contributor, not part of the Quant or L1 teams, and I’m not 100% dedicated. But I’m accumulating LUNC and USTC, and I’m 100% confident that reaching $1 for both LUNC and USTC is possible.
I hope that the Quant and L1 team will verify if this functionality is viable, as I have tested it and it has reduced the supply. In any case, I will always be looking for solutions to reduce this offer.
May peace reign in the community!
