LUNC $1 Goal on Track as Binance in Talks With Terra Classic Team To Push USTC Re-peg

The USTC Quant Team has established a line of communication with Binance, increasing hopes of the stablecoin’s re-peg and a Terra Classic (LUNC) price rally.

Terra Classic community members have had their hopes raised regarding the revitalization of the collapsed ecosystem algorithmic stablecoin, TerraClassicUSD (USTC), formerly TerraUSD (UST).

On Wednesday, a renowned community member Redline Drifter disclosed that the Quant Team focused on USTC repegging, has established a connection with the world’s largest crypto exchange Binance.

“A direct line of communication has been opened between Binance and the USTC Quant Team,” he wrote, sharing a snapshot that depicted the progress made with other top CEXs and DEXs regarding implementing the recently passed USTC re-peg proposal.

A direct line of communication has been opened between #Binance   and the #USTC Quant Team.

We’re investigating the infrastructure issue in detail and will be looking to see if we can provide the solution or possibly apply the divergence algo differently to avoid the issue… pic.twitter.com/OSXixBpeuM

— RedlineDrifter (@RedlineDrifter) July 12, 2023

Notably, this strategic line of communication recently opened by the Quant Team aims to resolve Binance’s issues regarding the proposed divergence tax protocol as the community pushes to achieve parity for USTC with $1.

Drifter revealed: “We’re investigating the infrastructure issue in detail and will be looking to see if we can provide the solution or possibly apply the divergence algo differently to avoid the issue.”

USTC Re-peg Using Divergence Protocol

For context, the divergence protocol is an approach recommended by Drifter as one of the key ways to achieve a sustainable USTC re-peg. As he stated, the divergence protocol “works by charging an algorithmic/dynamic fee equal to the difference in price between the peg and market price.”

In other words, the mechanism previously explained by The Crypto Basic involves implementing divergence fees on USTC trades that fall below or exceed the $1 peg.

Drifter further proposed that the collected fees be utilized to repurchase the LUNC tokens and then burn them, thereby reducing the asset’s supply.

For this approach to be effective, Drifter stressed that the protocol must be implemented across all markets where USTC is traded, including CEXs and DEXs both on and off-chain.

Progress With Exchanges Regarding USTC Re-peg

Per his Wednesday update, significant progress has been made regarding integrating the USTC re-peg mechanisms on top CEXs and DEXs. In particular, Binance, Kucoin, Huobi, MEXC Global, and Terraswap have acknowledged and found the re-peg initiatives interesting.

Drifter also revealed that KuCoin’s technical department is currently reviewing the USTC re-peg proposal to issue further responses. He added that the Quant Team had completed initial discussions with Binance, KuCoin, and Terraswap DEX.

On the other hand, Kraken, Uniswap, OKX, and Superex exchanges are yet to fully acknowledge the USTC re-peg proposal, per Drifter’s snapshot. Interestingly, no exchange has rejected the development, indicating that all top trading platforms may support the recently passed USTC re-peg proposal.

LUNC To $1?

The LUNC price plummeted massively following the collapse of the Do Kwon-founded Terra ecosystem in May and is yet to recover.

Achieving strategic developments such as the re-peg of USTC to gain parity with $1, coupled with the relaunch of the ecosystem’s DeFi platform Terraport, LUNC price could rebound into an upward trajectory.

Other positive initiatives, such as burns and staking, could also prove handy in the project’s revitalization expedition.

This explains why Classy opted to burn 100% on his validator’s commission until year-end. Similarly, Binance has been executing monthly LUNC burns to support the Terra Classic community, with their latest burn totaling 2.6 billion LUNC.

Notably, the asset is changing hands at $0.000084 at the time of writing. LUNC has been showing momentum in the past 24 hours and seven days, recording a surge of 1.17% and 1.27%, respectively. However, the asset has declined by over 12% in the past 30 days.