Terra Classic Proposal Seeks to Set LUNC and USTC Community Pool Reserve Ceilings
A new governance proposal on Terra Classic has entered the voting stage, seeking to establish fixed reserve ceilings for the Community Pool and potentially redirect excess funds to the Oracle Pool.
The proposal would set the Community Pool reserve at 7 billion LUNC and 60 million USTC. Any balance above these levels could be transferred to the Oracle Pool through separate governance decisions.
Proposed Community Pool Reserve Limits
The proposal establishes two reserve ceilings:
| Asset | Proposed Community Pool Ceiling |
|---|---|
| LUNC | 7 billion |
| USTC | 60 million |
The purpose is to maintain a substantial reserve for future community needs while preventing the Community Pool from holding significantly more funds than the proposed target.
Community Pool Holds Funds Above the Proposed Limits
At the snapshot referenced by the proposal, the Community Pool held approximately 8.47 billion LUNC and 61.93 million USTC.
This means the balances were approximately:
1.47 billion LUNC above the proposed ceiling
1.93 million USTC above the proposed ceiling
These excess amounts could potentially become the subject of future transfers to the Oracle Pool.
The Proposal Does Not Automatically Transfer Funds
Passing the reserve ceiling proposal would not immediately move the excess LUNC or USTC.
Instead, the proposal would establish the policy for how much the Community Pool should retain.
Separate governance proposals would still be required to approve the initial transfers to the Oracle Pool.
The proposal also leaves open the possibility of implementing an automated mechanism in a future software upgrade.
Why Redirect Funds to the Oracle Pool?
The proposal comes as the Oracle Pool has experienced a significant decline in its LUNC balance.
The Oracle Pool plays an important role in Terra Classic by supporting rewards for validators and delegators participating in Oracle voting.
According to the proposal, the Oracle Pool’s LUNC balance declined from approximately 192 billion LUNC in 2023 to around 39 billion LUNC in 2026.
Redirecting excess Community Pool funds could therefore provide additional resources to the Oracle Pool and help support Oracle related rewards over time.
What Happens to the LUNC?
The proposed transfer would not burn LUNC.
Instead, excess LUNC held by the Community Pool would be moved to another pool within the Terra Classic ecosystem.
Once in the Oracle Pool, the funds could contribute to rewards for qualifying validators and their delegators participating in Oracle voting.
As a result, the proposal should be viewed as a fund allocation measure rather than a supply reduction mechanism.
What This Could Mean for Terra Classic
The proposal is designed to balance two objectives.
First, the Community Pool would continue to maintain a significant reserve of LUNC and USTC for future ecosystem needs.
Second, funds above the proposed reserve levels could be put to use supporting the Oracle Pool rather than remaining in the Community Pool.
If approved and followed by separate transfer proposals, the approach could shift excess community funds toward supporting Terra Classic’s Oracle infrastructure and its participants.
Key Takeaway
The new proposal seeks to establish 7 billion LUNC and 60 million USTC as the Community Pool reserve ceilings.
Based on the proposal’s snapshot, the Community Pool held approximately 1.47 billion LUNC and 1.93 million USTC above those proposed limits.
However, these funds would not be transferred automatically if the proposal passes. Separate governance approval would be required for the transfers.
Ultimately, the proposal is focused on how Terra Classic manages its existing community reserves, with the potential to redirect excess funds toward the Oracle Pool and strengthen its reward system.
