The Terra Classic Community Votes to Cease Minting and Reminting of USTC
The Terra Classic (LUNC) community has made the decision to halt all minting and reminting of Terra Classic USD (USTC), the algorithmic stablecoin formerly known as UST. This choice follows a period of significant decline in the Terra ecosystem’s value, which dropped from $45 billion.
The Proposal and its Objectives
To address the UST de-pegging crisis, the Terra Classic community proposed discontinuing the UST-LUNA swapping mechanism. This mechanism allowed users to freely swap between UST and LUNA but proved problematic during times of crisis.
With 59% approval, the community voted in favor of ceasing the swapping mechanism, demonstrating their commitment to rebuilding trust and stability. The decision to stop minting and reminting USTC aims to prevent future crises and protect asset value.
The UST De-pegging Crisis
In May 2022, UST lost its peg to the US dollar, leading to a chain reaction that shook the Terra community. To stabilize UST’s value, an unprecedented number of LUNA tokens were minted, flooding the market and creating an oversupply.
This oversupply caused a decline in LUNA’s value, exacerbating the problem and further reducing UST’s price below its intended peg. As a result, UST traded at less than one cent instead of its 1:1 peg with the US dollar.
The cessation of minting and other measures adopted recently may contribute to restoring value in the Terra ecosystem.
Hot Take: Rebuilding Trust for Stability in Terra Classic
The Terra Classic community’s decision to cease minting and reminting USTC demonstrates their commitment to rebuilding trust and stability in the ecosystem. By discontinuing the UST-LUNA swapping mechanism, they aim to prevent future crises and protect asset value.
This move comes after the UST de-pegging crisis, where UST lost its peg to the US dollar, causing a significant decline in value. The community’s focus on rebuilding trust and stability is essential for restoring confidence in the Terra Classic ecosystem and attracting external investors.
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