Changing the Reward Share Distribution of the Burn Tax

The technical details of this can be a bit complex. I will try to simplify some of it at the cost of a little less precision in definitions and numbers. This draft has been up a few weeks ago with more details on block proposer rewards. I removed those parts as proposer rewards will be removed with SDK 0.47+. For those who want to read the old one, you find it here: https://commonwealth.im/terra-classic/discussion/14064-changing-the-reward-share-distribution-of-the-burn-tax Important: This proposal does not change the burn tax rate, nor the amount sent to burn! Problem Definition Currently, Terra Classic has a burn tax, that is set to 0.5%. It is distributed as follows: - 80% to burn - 20% to distribution The distribution in detail is like this: - 80% to burn - 10% to Community Pool - 10% to rewards Until SDK 0.47 there are also block proposer rewards which lower the block rewards part. I leave this out for simplicity (see first paragraph). Changing the distribution I propose to change the burn tax distribution as follows: - 80% burn - 10% Community Pool - 10% Oracle Pool This would have several effects. 1. Block rewards would only include gas fees as it was before the tax distribution. 2. Instead of immediate block rewards, the portion from the tax would go into long-term staking rewards (Oracle) 3. Fairer distribution of the tax (which should not be distributed like gas fees) Regarding the concern that this would reduce the APR (staking rewards gained), by my calculation it would only reduce the APR by about ~0.5%, but this also fluctuates depending on on-chain volume (LUNC/USTC sent, not # of transactions). Gas fees would still be distributed immediately on each block and not sent to the Oracle Pool. Things to note: It is important to mention (for everyone to make informed decisions) that the share of APR that is contributed by block rewards (vs. oracle rewards) fluctuates depending on on-chain volume. On lower volume, the oracle share on rewards is > 90-95%. It is also important that this change needs L1 coding, i.e. can not be done with a parameter change. I would propose to introduce a new "oracle_tax" parameter according to the existing "community_tax" parameter which decides on the percentage from distribution that goes to CommunityPool. Cast your vote Yes: I agree that the distribution method should be changed No: I want to leave the distribution method as is Abstain: I want to go with the majority vote No with Veto: - Discussion thread on Commonwealth: https://commonwealth.im/terra-luna-classic-lunc/discussion/15319-changing-the-reward-share-distribution-of-the-burn-tax