Termination of USTC Minting: How Terra Classic Attempts to Restore USD Peg
Date: 2023-09-24 Author: Dima Zakharov Categories: CRYPTO PAYMENTS, BUSINESS
Cryptocurrency News: Terra Classic and its Decision to Halt USTC Minting
A significant event has taken place in the world of cryptocurrencies concerning Terra Classic and its stablecoin Terra Classic USD (USTC). The Terra Classic community, actively involved in the development of this cryptocurrency ecosystem, has voted to completely halt USTC minting. This decision came after the events related to the Terra ecosystem's crash in May of the previous year.
The primary reason for this decision was the loss of USTC's peg to the US dollar. Previously, Terra allowed UST to be freely exchanged for the cryptocurrency LUNA; however, after losing this peg, the stablecoin mechanism experienced a dramatic failure. As a result, massive volumes of LUNA tokens flooded the market, and the price of UST plummeted to below one cent.
The news of halting USTC minting was approved by 59% of the Terra Classic community participants. They see this step as an opportunity to protect the interests of the community and external investors who continue to burn USTC in hopes of restoring the peg to the US dollar.
However, this decision goes beyond just halting minting. Terra Classic hopes to restore the original parity of USTC with the US dollar in the future. This entails burning trillions of LUNC tokens that were created during the crisis. According to LUNC Metrics data, only 75 billion out of nearly 6 trillion USTC tokens in circulation have been burned to date.
The current price of USTC stands at only $0.012, reflecting the challenges this stablecoin has faced after losing its peg.
Interestingly, Terra Classic has chosen to make efforts to restore the peg of USTC, while developers attempted to address the issue through additional funding for the stablecoin and burning LUNA tokens. Despite these efforts, the expected results were not achieved.
Additionally, it's worth noting that after the Terra ecosystem's crash, Terraform Labs co-founder Do Kwon launched a new version of the blockchain known as Terra 2.0. While much of the Terra community remained on the original blockchain, Terra Classic continues to fight for the recovery of USTC.
This significant event in the world of cryptocurrencies underscores not only the challenges stablecoins can face but also the importance of democratic decisions made by communities to protect their interests. Terra Classic is currently on the path to restoring stability to its cryptocurrency ecosystem, and its success will be closely watched by many in the industry.
