Terra Classic to stop Minting USTC
The Terra Classic community votes to discontinue USTC minting, aiming to achieve a repeg to the US dollar and address community concerns.
On September 23, the Terra Classic community cast their votes, and the results were clear: over 59% were in favor of discontinuing the minting and reminting of USTC. This decision was not made lightly. It was driven by the need to safeguard both the community's interests and those of external investors. By reducing the supply of USTC, the community aims to inch closer to their goal of achieving a repeg to the US dollar.
“This proposal also stops loopholes such as converting xUST to mint USTC. We pay the Algo Quant team to re-peg USTC to USD, and the Terra Classic community is participating in the burning of the USTC supply,” the proposal reads.
Terra Classic poll results. (Source: Atom Scan)
In May 2022, USTC experienced a depegging from the US dollar. This event had a domino effect, causing Terra to undergo a significant collapse. Luna Classic (LUNC), which has close ties to USTC, wasn't spared either. Its value took a nosedive, plummeting by nearly 100%. This downturn resonated across the crypto markets, wiping out approximately $40 billion in total market capitalization.
The decision to halt USTC minting is expected to have several effects:
- Major Exchanges and USTC: The proposal suggests that this move could encourage major crypto exchanges, like Binance, to start burning USTC. With the cessation of minting and reminting, exchanges might be more inclined to participate in the burning process, aiding the repegging efforts.
- Community Concerns: Post the depegging event, the Terra Classic community expressed concerns about an increase in spam, especially following the decline in LUNC prices. To address this, the community considered multiple proposals, including raising the minimum deposit requirement. This proposal saw overwhelming support, with 93.22% voting in favor of increasing the minimum deposit from 1 million LUNC to 5 million LUNC.
- Market Response: Following the announcement of the halt in USTC minting, the USTC price saw a 3.9% increase, trading at $0.0129. LUNC also experienced a positive trend, with its value rising by 8.3% over a week.
So far, only 74.91 billion LUNC has been burnt, which leaves the circulating supply at 5.82 trillion and a total supply of 6.84 trillion.
Luna Classic Burn.
In the meantime, the U.S. Securities and Exchange Commission (SEC) has taken action to request a deposition from Do Kwon, the former CEO of Terraform Labs and the driving force behind Terra UST. Do Kwon, who is currently serving a prison sentence in Montenegro for passport fraud, is expected to remain incarcerated until the end of the year. However, his future remains uncertain as both the United States and South Korea are pursuing his extradition, potentially leading to lengthy prison sentences in both countries.