In a pivotal move, the Terra Classic community has sanctioned a proposal to discontinue the production of the erstwhile stablecoin, Terra USD (often known as UST or USTC). While the decision faced resistance from 40.56% of voters, it ultimately secured approval with 59.42% endorsing the software modification.
Endorsement to Cease USTC Production Obtained
Currently ranking at 200th position among over 10,000 digital assets in the cryptocurrency sphere, USTC observed a 4% appreciation in its value within the last 24 hours. As of September 24, 2023, 1:00 p.m. Eastern Time, one USTC trades at $0.0127. In contrast, prior to the adverse events in Terra’s ecosystem in May 2022, the stablecoin had been stable at $1, faithfully pegged to the USD for an extended period. However, on May 9, 2022, USTC deviated from its alignment with the U.S. dollar, a condition that persisted thereafter.
In spite of setbacks in the Terra blockchain network, the community—comprising both users and developers—remained steadfast. Historically, Terra’s blockchain enabled trading between the formerly stable coin USTC and its counterpart LUNA, a circumstance that resulted in a monumental increase in LUNA’s supply into the trillions. The recently passed governance proposal aims to abolish the USTC issuance mechanism via software modifications. A significant 59.42% of voting participants supported the measure, intending to eliminate both USTC creation and existing system vulnerabilities.
The approved proposal outlines that, “All issuance and reissuance of USTC will be suspended unless explicitly authorized by the Terra Classic community. The proposal additionally closes the loopholes that permitted the conversion from xUST to USTC. Funds have been allocated to the Algo Quant team for the purpose of recalibrating USTC’s peg to the U.S. dollar, and there is community participation in the reduction of the USTC supply to facilitate this recalibration.”
The collective sentiment within the community leans towards the optimistic side about restoring USTC’s peg to the U.S. dollar—a subject that has dominated conversations for the past year. “This proposal serves to protect both the community and external investors who are actively involved in USTC burning as part of the peg-recovery efforts,” the proposal explicitly states. Meanwhile, LUNA’s valuation has taken a nosedive. Despite a nominal 5% uplift against the dollar, the current trading rate for LUNA stands at a mere $0.00006206 per unit, a catastrophic decline from its apex value of $119.18.
What are your views on the community’s decision to suspend the issuance of USTC? We invite you to share your informed opinions on this matter in the comments section below.
Frequently Asked Questions (FAQs) about Stablecoin Governance
What is USTC, and why was its minting halted?
USTC, short for Terra USD Classic, is a cryptocurrency and stablecoin. Its minting was halted due to a community-led initiative to address its deviation from the USD peg.
What percentage of the Terra Classic community supported the minting freeze?
The community’s decision to halt USTC minting received support from 59.42% of participants in the vote.
What does the proposal entail regarding USTC issuance?
The approved proposal ensures that all issuance and reissuance of USTC will only occur with explicit authorization from the Terra Classic community.
How does the proposal address loopholes in USTC issuance?
The proposal aims to close loopholes, such as converting xUST to mint USTC, to ensure more stringent control over USTC issuance.
What steps are being taken to re-anchor USTC to the U.S. dollar?
Funds have been allocated to the Algo Quant team to recalibrate USTC’s peg to the U.S. dollar, and community members are actively participating in reducing the USTC supply to facilitate the re-pegging process.
What is the sentiment within the Terra Classic community regarding USTC’s future stability?
The community is optimistic about re-establishing USTC’s peg to the U.S. dollar, and the proposal is seen as a protective measure for both the community and external investors involved in USTC burning to achieve the re-peg.
What has been the performance of LUNA, another cryptocurrency mentioned in the text?
LUNA’s value has significantly declined, currently trading at a fraction of its peak value, despite a recent 5% increase against the dollar.
More about Stablecoin Governance
- Terra Classic Community Announcement
- Terra USD Classic (USTC) Overview
- Terra Blockchain Network
- LUNA Cryptocurrency Performance
- Crypto Governance Proposals