Terra Classic Community Votes to Halt USTC Minting

The Terra Classic community has made a significant decision aimed at restoring stability to TerraUSD Classic (USTC) and its relationship with the United States dollar. In a recent community proposal, a majority of 59% voted in favor of discontinuing USTC minting activities, while approximately 40% were opposed to the change.

This move is driven by the collective goal of protecting the interests of the community and external investors by reducing the overall supply of USTC. The objective is to reestablish a firm peg between USTC and the U.S. dollar.

The backstory to this decision can be traced back to May 2022 when USTC ceased to maintain its peg to the U.S. dollar. This event had far-reaching consequences, causing Terra and its closely linked asset, Luna Classic (LUNC), to experience a devastating collapse. LUNC, in particular, saw its value plummet by nearly 100%, triggering a broader downturn in the cryptocurrency markets and resulting in a staggering loss of approximately $40 billion in total market capitalization.

The proposal to cease minting activities also highlighted the likelihood of major cryptocurrency exchanges burning USTC. The rationale behind this move is to facilitate institutions like Binance in their efforts to burn USTC tokens, now that minting and reminting have come to a halt.

This decision follows earlier concerns within the Terra Classic community regarding a surge in spam activities coinciding with the decline in LUNC prices. In response, the community initiated a series of proposals, one of which aimed to increase the minimum deposit requirement from 1 million LUNC to 5 million LUNC. The proposal’s voting period concluded on September 16, with an overwhelming 93.22% majority in favor of raising the minimum deposit requirement.

In summary, the Terra Classic community is taking proactive steps to address the challenges it has faced since USTC’s pegging disruption, with a strong commitment to restoring stability and investor confidence in its ecosystem.

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