Since 2022, the Terra Classic community has been pursuing ways to repeg its stablecoin USTC, which formed a bearish market structure. In a recent report, the Terra community suggested that the stablecoin issuer should cease minting digital assets. Also, the community urged the Terra community to adjourn the reminting activities.
Repegging of Terra USTC
In an AtomScan report, approximately 59% of the Terra supporters voted to discontinue minting activities. In contrast, 40% of the participants had a different mechanism to support the repegging of the USTC.
The completed voting process aims to revive the USTC’s stability, which was backed by the US dollar currency. Additionally, the voting process aims at protecting the interest of the devastated stakeholders affected by the crashing of the Terra ecosystem.
In May last year, the USTC depegged from the US dollar, causing a downturn in the entire crypto market. At that time, the repercussions of the crashing of Terra negatively affected the performance of Luna Classic (LUNC), a stablecoin backed by USTC.
The report shows that LUNC’s market value dropped by nearly 100%, which resulted in loss of substantial assets. The dribbling momentum established by LUNC and USTC created a domino effect on significant crypto investments. The poor market performance recorded by the stablecoins obliged the regulators led by the US Securities and Exchange Commission (SEC) to probe the matter.
USTC and LUNC Fails to Overcome Bearish Structure
Reportedly, the SEC had filed multiple lawsuits against the co-founder of Terra Do Kwon for exposing the customers to losses. In the filing, the SEC accused Do Kwon of orchestrating a fraudulent scheme that resulted in the loss of billions of dollars.
Initially, the trash-talking entrepreneur described Luna and Terra UST as a game changer in the crypto sector. Do Kwon’s great invention failed last year, leading to a loss of over $300 billion.
The downfall of Terra and Luna challenged the community to explore practical ways to restore the market performance of the stablecoins. From the AtomScan report, the Terra community believed that by reducing the supply of USTC, the troubled stablecoin definitely repeg. The proposal underlined that halting the minting and reminting activities would encourage the exchange to commence the burning of the USTC.
Terra Classic to Suspend Minting and Reminting
In the proposal, the crypto community requested a fast-paced crypto exchange to support burning USTC. As of press, Binance burns approximately 50% of LUNC monthly.
In the meantime, the Terra community has requested the Binance team to support the burning of USTC. They project was that if Binance could support the burning of the stablecoin, the USTC would repeg.
At the beginning of September, the Terra community raised concerns about the rise of spam proposals. The community agreed to establish measures to address spam. The report indicated that the minimum deposit will be increased to 5 million LUNC.