Terra Classic community is yet to give up on the USTC dollar peg.
In a medium post, Terra Classic community members Edward Kim and Alex Forshaw offer a rough roadmap of the community-driven network revealing an audacious plan to recover the TerraClassicUSD (USTC) dollar peg after the implementation of a 1.2% tax burn on September 20.
It bears mentioning that in May, UST now USTC lost parity with the US dollar, failed to reclaim it, and crashed to zero. Consequently, this crash led to an excess minting of LUNA tokens, now LUNA Classic (LUNC), dragging down the value of LUNC. However, TerraForm Labs disabled the swaps between LUNC and USTC to prevent further damage.
Kim and Forshaw, describing the situation, wrote, “the blockchain ‘defaulted’ (stopped making payments on a loan), and the 10.3 billion remaining USTC in circulation became approximately $9.5 billion bad debt.” The authors compared the Terra Classic network to a developing country with a debt default. They said there is a need for a form of debt restructuring.
According to the authors, putting in the effort to recover the dollar peg only makes sense if they can ensure USTC is no longer vulnerable to the attack that sent it crashing down. Secondly, if the process would not be overwhelming for the community bound to fund it, and finally, if the stablecoin reserves can prevent a repeat of the death spiral should it come under attack again.
“… by resurrecting — and drastically improving — the decentralized stablecoin, we can turn one of crypto’s biggest defeats into the most stunning turnaround in digital asset history.”
While re-emphasizing their belief in the need for a truly decentralized stablecoin in crypto that is resistant to censorship and scalable, the authors also explain that USTC regaining its peg will more effectively burn LUNC tokens through its original algorithmic controls.
It bears mentioning that the final stage in the roadmap is to attract utility as almost all projects on the network left following the ecosystem collapse. While talks have been initiated with these projects to get them back with the active community as its biggest selling point, Kim and Forshaw assert that the best bet for the network is to develop to meet the project standards. Additionally, they note that projects built on Terra 2.0 are compatible with the classic chain.
So far, the community has already made significant progress with what the authors see as the first step, the 1.2% tax parameter change. The community believes that the move to collect and burn 1.2% tax from all on-chain and off-chain transactions with the support of centralized exchanges is the first step to making the asset deflationary.
The parameter change is scheduled to go live in less than six days, following approval from TFL. It has so far attracted the support of several exchanges.