Terra Classic Community Proposes Repeg Idea for USTC; How far will this fly?

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Three members of the Terra Classic community have written their thoughts on how to achieve re-pegging for USTC and LUNC.

Alex Forshaw, Edward Kim and Maximilian Bryan, members of the Terra Classic community, propose an idea to restructure Terra Classic’s USTC through the creation of an algorithmic fungible token, USTN, which is backed by a decentralized reserve in first instance of BTC (60%) and LUNC market capitalization (variable) secured by an (improved) Terra capital control system.

Under the proposal, USTN would be classified as not a stablecoin, but an AFT algorithmic fungible token. A total of 504 billion LUNC is to be created in new supply, of which 49%, or 251 billion, will go into the community pool. A total of 253 billion goes to USTN users who are not blacklisted. The proposal states that there will be an airdrop from USTN for current USTC holders. The proposal is still in the preparatory stages and would be subject to a board vote.

How far will this go?

The question remains how far the proposal can fly. The Terra rebels or the Terra Classic community have already approved a 1.2% tax-burning proposal that aims to significantly reduce LUNC’s 6.9 trillion supply to about 10 billion. Binance recently indicated its support for the plan by announcing a burning mechanism to burn all trading fees on LUNC spot and margin trading pairs by sending them to the LUNC brand address.

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For individuals who lost millions of dollars in the Terra LUNA crash, the gains probably won’t help much, but it could still be something rather than nothing.

Therefore, the idea of ​​the proposal to create a new stock of 504 billion LUNC may be strongly opposed. Second, using Bitcoin as collateral can be another problem to contend with. The proposal states that USTN would be backed by a decentralized reserve, initially of BTC (60%).

Third, it may take some time to rebuild trust in the proposed USN token. The Terra ecosystem collapsed in May after the UST depeg, leading to $60 billion in erased value. And while Terra co-founder Do Kwon denies he is on the run, Interpol has issued a “red warning” for his arrest after reports surfaced that he was not in Singapore.

It remains to be seen, therefore, how the proposed plan to replace the USTC stablecoin might turn out.

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