Following a decisive vote within the Terra Luna community, an initiative to stop the creation of the stablecoin formerly known as “terra usd” (commonly known as UST or USTC) was approved.
Despite 40.56% opposition, 59.42% of votes gave the green light for the software update.
Terra/Luna ecosystem votes to discontinue USTC stablecoin minting: community looks to future Re-Peg
In a decisive move within the Terra Classic community, the proposal to discontinue the minting of the Terra USD coin (USTC), commonly known as UST or USTC, was approved. With 59.42% of votes in favor and 40.56% against, this software update paves the way for a significant change in the cryptocurrency landscape.
The blocking of the minting of USTC
On 24 September 2023, at 1 PM Eastern Time, the value of a single USTC is $0.0127. This figure marks a remarkable 4% increase in value in a single day.
However, to truly understand the significance of this move, we need to go back to 9 May 2022, when the Terra ecosystem experienced a pivotal moment.
Before that date, the USTC had firmly maintained its peg to the US dollar, staying valiantly at $1 per unit for a long time.
However, on that fateful day, the USTC diverged from its peg to the US dollar, never regaining equilibrium.
This departure caused a shockwave in the blockchain ecosystem Terra, which had played a key role in facilitating exchanges between the USTC and LUNA. The result was a surge in LUNA’s supply, which reached astronomical trillions.
The recent governance motion aims to end the USTC minting process through software changes.
Notably, 59.42% of participants in the Terra Classic community gave their approval to this motion. Its main goals include ending USTC minting and closing some persistent loopholes.
Specifically, the motion states, “This proposal will stop all USTC minting and repainting without the approval of the Terra Classic community.
This proposal also ends 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 participates in burning the USTC supply, which also facilitates re-peg.”
Optimism for re-peg of USTC to USD
One noteworthy aspect of this development is the community’s optimism about the re-peg of the USTC to the US dollar.
This issue has been at the center of discussions over the past year. The proposal underscores the importance of this move, stating:
“This proposal protects the community and outside investors who are burning USTC, helping to achieve re-peg.”
While the current value of USTC is $0.012 per coin, the situation is quite different for LUNA. Despite having experienced a 5% increase against the dollar, LUNA is now trading at only $0.00006206 per unit. This represents a staggering 99.99999% drop from its peak value of $119.18.
The Terra Classic community’s resounding vote to stop the minting of USTC marks a significant chapter in the ongoing saga of stable coins and blockchain governance.
It highlights the importance of community consensus and determination to correct deviations from stablecoin pegs.
As the Terra Classic community strives to re-anchor the USTC to the US dollar, the cryptocurrency world watches with trepidation.
The outcome of this endeavor can serve as a model for addressing similar challenges in the broader blockchain and cryptocurrency ecosystem. The journey toward re-pegging the USTC is a testament to the resilience and adaptability of blockchain communities in the face of adversity.
Source: https://en.cryptonomist.ch/2023/09/25/earth-moon-issuance-ustc-stablecoin-blocked/