Optimism Grows as USTC Burn Proposal Passes

• The Terra Luna Classic ecosystem has agreed to burn over 46 million USTC.
• These funds belong to Mirror Protocol and are part of Terraform Labs’ winding down requirements.

The Terra Luna Classic community has successfully passed a vote on a TerraClassicUSD (USTC) burn proposal, fueling optimism in the ecosystem. This proposal follows Terraform Labs’ recent decision to wind down operations and burn remaining assets. 

Details of the USTC Burn Proposal

Blockchain researcher Collin Brown disclosed that the USTC burn proposal aims to remove 46.55 million USTC tokens from circulation through contract migration. “This move is set to secure community assets and remove inactive contracts,” Collin stated.

The proposal was introduced for the second time after the first attempt failed during on-chain execution due to insufficient USTC contract balance. The contracts were, however, removed from this proposal to ensure proper execution, indicating the community’s dedication to the initiative. Community members voted 33.9% in favor of the proposal, 1.3% against it, 36.46% veto, and 28.25% abstained.

Meanwhile, the USTC token burn focuses on wallets linked to the Mirror Protocol. This funds have been inactive since the May 2022 crash of USTC and LUNA. However, Terraform Labs is required to destroy all wallets holding Terra Classic tokens as part of its wind-down proceedings. Notably, the funds associated with Mirror Protocol are native assets of USTC and LUNC.

In a community wind-down meeting, Terraform Labs CEO Chris Amani mentioned that the tokens will be burned rather than destroyed keys to the related wallets. This approach is driven by a need to ensure security and compliance with ongoing legal requirements.

“When we look at the Mirror Protocol wallets, they are contract-based, which means they can be migrated to a new code via governance in the same manner as the Risk Harbour funds,” Chris added.

The latest proposal approval follows an earlier 726 million USTC burn from Anchor Protocol, as CNF highlighted in an article. As a reminder, the US SEC accused Terraform Labs and its founder, Do Kwon, of defrauding investors, leading to the collapse of the ecosystem. Kwon was ordered to pay $110 million as part of a settlement agreement and $14.3 million in prejudgment interest.

As part of its settlement, Terraform Labs received approval to liquidate all of its assets and cease operations. The liquidation approved by the court will allow the company to initiate its compensation period for investors affected by the crash. Thus, the approval of the USTC token burn proposal indicates a positive development toward shutting down the Terraform ecosystem.

USTC and LUNC Skyrockets on 46.55M Burn Proposal Approval

Following the token burn approval announcement, USTC’s price experienced a 2.2% increase over 24 hours. 

This rekindled optimism about USTC reaching its December $0.06 level. However, the price stabilized at around $0.018 as of this writing. Additionally, USTC’s trading volume spiked 25% in the past day to $8.6 million.

Beyond the USTC rally, the LUNC token gained a 2.3% uptick in the last 24 hours, with the price exchanging hands at $0.00009095. LUNC’s trading volume has surged 25.8% in the last 24 hours to $27.7 million.