Terra’s Community Votes to Stop Minting of TerraClassicUSD (USTC)
The minting of TerraClassicUSD (USTC) will be discontinued as the community has voted in favor of a proposal to stop all minting and reminting of USTC. The proposal, which aimed to facilitate the re-pegging of USTC to the US dollar through the burning of the stablecoin supply, passed with 59.42% of the vote. Burning tokens is expected to help restore USTC’s peg to the US dollar, allowing institutions like Binance to start burning USTC now that minting and reminting are over.
TerraUSD’s Troubled Past
TerraUSD is an algorithmic stablecoin associated with the Terra Classic blockchain ecosystem. However, in May 2022, the value of LUNA, the sister token of TerraUSD, collapsed from over $120 to zero. This caused significant losses for the cryptocurrency market and raised doubts about the viability of algorithmic stablecoins. The Terra collapse also led to increased regulatory scrutiny, with the European Union passing regulations for stablecoin issuers and Crypto Asset Service Providers (CASPs). Hong Kong is also working on establishing a regulatory framework for stablecoins.
Terra Classic and FTX’s Revival Efforts
FTX exchange, under new leadership, is discussing potential investments as it aims to redefine its future. The company is working on recovering assets to repay creditors and customers while dealing with high costs. On the other hand, Sam Bankman-Fried (SBF), former CEO of FTX, opposes the restructuring plan.
The Terra community is divided on the revival efforts. Terraform Labs announced Terra 2.0, a fork blockchain from Terra Classic with its own native token, LUNA. Do Kwon, co-founder of Terraform Labs, revealed that he is developing new products for Terra 2.0 to resolve congestion issues. Some Terra Classic investors, however, continue to support the original blockchain.
Hot Take: The Future of Terra Classic and FTX
While confidence in Terra Classic and FTX has diminished due to their past setbacks, these initiatives were once influential in the crypto sector, and many loyal users still support them. The success of their revival efforts remains uncertain, but only time will tell if they can overcome their challenges and chart a new path forward.
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