Terra Classic Community’s Ambitious Move: Halting USTC Minting in Quest to Restore $1 Peg
In a significant development within the Terra Classic (LUNC) community, a crucial decision has been reached regarding the Terra Classic USD (USTC), the once-prominent algorithmic stablecoin that played a central role in the Terra ecosystem’s shocking $45 billion collapse.
Terra, renowned for its ability to facilitate seamless swaps between USTC and LUNA, its companion cryptocurrency, encountered a catastrophic failure when USTC deviated from its peg in May 2022. This failure resulted in an unprecedented situation where trillions of LUNA tokens were minted, causing the price of USTC to plummet below one cent.
In a bid to rectify this situation and safeguard the interests of the community and external investors, a proposal to halt the swapping mechanism has been approved with an impressive 59% majority. The primary objective of this move is to work towards restoring USTC to its original $1 peg by addressing the trillions of tokens generated during the disastrous collapse.
At present, the Terra Classic community has succeeded in burning a modest 75 billion tokens, accounting for approximately 1% of the nearly 6 trillion tokens currently in circulation. These efforts, as reported by LUNC Metrics, mark the initial steps taken toward stabilizing the value of USTC and bolstering confidence in the Terra ecosystem.
The decision to cease minting and reminting of USTC is not only a significant milestone but also a reflection of the determination within the Terra Classic community to address the issues that led to the substantial loss of value. By taking these steps, they aim to mitigate the risks associated with USTC and gradually rebuild trust in the Terra ecosystem.
However, it is important to note that the road to recovery remains long and challenging. The burning of trillions of tokens will require a concerted effort from the Terra Classic community, and it is uncertain how long it will take to fully achieve the desired $1 peg for USTC.
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