- Terra aims to restore a stable peg between USTC and the US dollar
- Community expects that major crypto exchanges will now commence the process of eliminating USTC.
In a significant development within the Terra Classic community, a proposal to halt minting and reminting activities related to TerraClassicUSD (USTC) has garnered support from the majority, with 59% of the community members in favor of the change. The primary objective behind this move is to restore a stable peg between USTC and the US dollar, safeguarding the interests of both the community and external investors by reducing the supply of USTC.
The decision to discontinue minting USTC comes after a tumultuous period for the Terra ecosystem. In May 2022, the price of Terra’s algorithmic stablecoin, terraUSD (UST), which is designed to maintain a $1 peg, experienced a sharp decline, plummeting to just 35 cents on May 9. This drastic fall was mirrored by UST’s companion token, LUNA, which was supposed to stabilize UST’s price, dropping from $80 to just a few cents by May 12, 2022.
The crisis in May 2022 was exacerbated by USTC’s notable detachment from the US dollar, leading to a catastrophic decline for Terra. LUNC, closely tied to USTC, saw its value drop by nearly 100%, triggering a broader downturn in the cryptocurrency markets and resulting in the loss of approximately $40 billion in total market capitalization.
The recent proposal to cease USTC minting is seen as a crucial step towards restoring confidence in the Terra ecosystem. Notably, the community expects that major crypto exchanges will now commence the process of eliminating USTC. This move is anticipated to encourage institutions like Binance to begin burning USTC tokens, as the minting and reminting activities are being discontinued.
In addition to addressing the USTC issue, the Terra Classic community is also addressing concerns about spam following the decline in Luna Classic (LUNC) prices. To combat these challenges and revive the LUNC chain, community members are considering a proposal to onboard the Six Samurai team, known for their experience in blockchain development.
Supporters of this proposal argue that the current developer team, elected as the L1 Task Force, may require assistance from experienced developers to successfully rebuild the chain and fix issues like Astroport Classic, a decentralized exchange on the Terra Classic network.