LUNC and USTC Community Pool Reserve Proposal: What Are the Benefits If Passed?
A new Terra Classic governance proposal aims to establish reserve ceilings for the Community Pool at 7 billion LUNC and 60 million USTC.
The proposal does not immediately transfer any funds. Instead, it establishes a policy where the Community Pool would retain funds up to these levels, while eligible surplus above the ceilings could eventually be routed to the Oracle Pool through separate governance approved transfers and, later, automated software.
If passed and successfully implemented, the proposal could provide several benefits for the Terra Classic ecosystem.
1. A Large Community Reserve Would Remain Protected
One of the main benefits is that the Community Pool would continue to maintain a substantial reserve.
The proposed ceilings would retain 7 billion LUNC and 60 million USTC in the Community Pool. These funds would remain available for development, infrastructure, emergencies and other community approved spending.
At the proposal snapshot, the Community Pool held approximately 8.47 billion LUNC and 61.93 million USTC. This means most of the existing reserves would remain untouched.
This creates a balance between using excess reserves and maintaining financial flexibility for future needs.
2. The Oracle Pool Could Receive Additional Funding
The proposal’s main purpose is to address the different directions of the Community Pool and Oracle Pool.
While the Community Pool has grown significantly, the Oracle Pool has declined. Between August 2023 and August 2026, the Oracle Pool’s LUNC balance fell from approximately 192.14 billion to 39.27 billion, while its USTC balance declined from approximately 658.8 million to 124.86 million.
Routing eligible Community Pool surplus to the Oracle Pool would provide an additional source of reward inventory.
The transferred funds would not be distributed immediately. They would enter the Oracle Pool and be released gradually according to the existing Oracle reward system.
3. It Could Strengthen Oracle Participation
Oracle voting is an important function of Terra Classic because validators provide price information that the network uses.
The Oracle Pool provides rewards to qualifying validators that successfully participate in Oracle voting, with rewards also reaching their delegators.
Additional funding could therefore help maintain the reward inventory used to incentivize Oracle participation.
The proposal does not guarantee higher staking rewards or APR. However, its objective is to create a more sustainable source of Oracle reward funding when the Community Pool has reserves above the established ceilings.
4. The Policy Could Create a More Predictable Treasury System
Currently, the Community Pool does not have an on chain retained balance ceiling.
The proposal introduces a clearly defined boundary.
Below the ceiling, the Community Pool continues operating normally. Once the balance exceeds the ceiling, only the eligible surplus can be considered for routing to the Oracle Pool.
This gives the community a clearer framework for deciding how much treasury capital should remain available and when excess reserves can be redirected.
5. Future Automation Could Reduce Repeated Governance Votes
Initially, transfers would require separate governance proposals for LUNC and USTC.
However, the long term goal is to introduce software that can check the Community Pool periodically and automatically route eligible surplus according to governance approved limits.
This could reduce the need for repeated manual proposals whenever the Community Pool grows above its reserve ceiling.
The automation would still operate under governance controlled parameters, including individual asset ceilings and transfer limits.
6. The Proposal Does Not Change the LUNC Burn Tax
Another important point is what the proposal does not change.
It does not modify the current 1.5% burn tax, gas prices, tax parameters or exemptions. It also does not mint or burn LUNC or USTC.
The proposal is therefore focused specifically on how excess Community Pool reserves could be used.
7. The Initial Transfers Would Be Controlled
The proposal does not give an automatic transfer of the entire surplus.
Each initial LUNC and USTC transfer would require its own governance proposal, fresh balance calculations, safety buffers and technical checks.
For USTC, additional conditions must also be confirmed before a transfer can proceed.
This staged approach allows the community to review the actual amount being transferred before funds move.
What Could This Mean for Terra Classic?
If passed and implemented successfully, the proposal would create a system where the Community Pool can maintain a large reserve while excess funds can help support the Oracle reward system.
The key idea is not simply moving Community Pool funds. It is creating a long term framework:
Maintain a substantial treasury reserve, identify excess funds and use eligible surplus to strengthen Oracle rewards.
At the same time, the proposal keeps ordinary Community Pool spending under governance control and does not change the LUNC burn tax or total supply.
Conclusion
The potential benefit of the LUNC and USTC Community Pool Reserve proposal is a more structured approach to managing Terra Classic’s treasury reserves.
The proposed 7 billion LUNC and 60 million USTC ceilings would preserve a significant Community Pool reserve while creating a mechanism for eligible excess funds to support the Oracle Pool.
If the later manual transfers, software development and governance approvals are successfully completed, the system could provide a recurring and more automated way to strengthen Oracle reward funding without immediately using the Community Pool’s core reserves.
The proposal itself, however, does not transfer funds or activate automation. Those steps require separate governance and technical approvals.
