With over 60% of votes cast in favor, the Terra Luna Classic (LUNC) community has decided to stop issuing new Terra Classic UST (USTC) tokens. Terra’s collapse in May 2022 sent shockwaves through the crypto market and left USTC’s value in ruins. Hence, a desperate step was made in an effort to save the struggling Terra Classic stablecoin.
The idea to stop USTC minting and reminting is part of a larger strategy to make the stablecoin’s re-pegging process easier. Members of the Terra Classic community are actively encouraged to take part in the burning of USTC tokens, thereby lowering the token’s available supply, to hasten this process.
Before the events of May 2022, people could easily switch between USTC and LUNA, Terra’s native cryptocurrency, thanks to the blockchain network. In a last-ditch effort to maintain stability, the system started minting LUNA coins as the network broke down and USTC lost its peg to the US dollar.
This last-minute action caused a surplus of LUNA tokens and a cascading impact on the market, which significantly devalued USTC below its intended $1 level.
The Reason for the Proposal
The main goal of the community’s proposal is to hasten the burning of LUNA tokens, which would ultimately increase the value of those tokens. Only 75 billion LUNC tokens have been successfully burned so far in the burning process, which removes tokens from circulation permanently. Out of a total supply of 6.84 trillion LUNC, this leaves the amount in circulation at roughly 5.9 trillion.
As more LUNA tokens were minted to restore the USTC peg, the oversupply put a great downward pressure on LUNA’s price. As a result, USTC’s worth drastically decreased from its initial $1 valuation.
LUNC/USDT trading at $0.000060 on the daily chart
Are there any Positive Indicators?
Despite the difficult path thus far, there are encouraging signs that provide the Terra Luna Classic community some cause for optimism. According to CoinGecko, the price of LUNC is currently $0.00006150, up 2.9% over the previous 24 hours and a promising 6.6% over the previous week.
Within a 24-hour window, key momentum indicators are beginning to approach overbought levels. The relative strength index (RSI) for LUNC is 53, which indicates moderate strength, and the money flow index (MFI), which indicates robust accumulation, is 76. This change in attitude suggests that community initiatives to restore value may be succeeding.
The bold move by the Terra Luna Classic community to stop USTC minting and reminting is a deliberate attempt to revive the faltering stablecoin. The community is working to drive USTC back towards its $1 peg with a renewed focus on burning LUNA tokens and addressing the supply-demand imbalance. This offers some hope in the middle of a difficult road to redemption.
Read Also: 16M Terra LUNC Burned in 24hrs; Terra Casino Accounted for Largest Burn
The post Terra Classic (LUNC) Community Votes on New Proposal: Will USTC Re-peg to the Dollar? appeared first on FXCryptoNews.
