Some members of the Terra Rebels have made a new proposal to restructure USTC, but there is a catch.
In a tweet on Monday, Alex Forshaw, a member of the Terra Classic developers group, the Terra Rebels, shared an updated re-peg proposal to help restructure TerraClassicUSD (USTC) by creating an “algorithmic fungible token (AFT).”
The Terra Classic Re-Peg: Updated Proposalhttps://t.co/WuP67sBvih
— 4lex_4sh4w_TR (@4lex_4sh4w_TR) October 3, 2022
According to the proposal authored by Forshaw, Edward Kim, and Maximilian Bryan, the Terra Rebels will create a new AFT dubbed USTN. The new token, which in most ways bears similarities with a stablecoin, will then be backed mostly by Bitcoin. Furthermore, the group will airdrop the new token to USTC holders.
However, the catch is that the Terra Rebels plan to mint 500 billion LUNC to purchase Bitcoin.
As justification for the pain this plan is sure to cause LUNC holders, the group asserts that the adoption of USTN will lead to faster LUNC burns. As per the proposal, about $5 billion in the adoption of USTN will burn about 2.5 trillion LUNC. Notably, the group believes this is achievable in a year.
Unsurprisingly, the idea of minting more LUNC has not gone well with many in the LUNC community, which has built its clarion call for revival around reducing LUNC supply.
The Community Response
LUNC Burn, an unofficial Twitter account dedicated to tracking LUNC burn activity that has gained a huge following in recent months, described the proposal as crazy and “out of touch.” According to LUNC Burn, it is a step backward, considering the burn initiatives that have already been implemented.
This plan from @4lex_4sh4w_TR to get us $Lunc investors to fund the creation of a new stable coin (even tho he’s not actually calling it a stable coin) is the most craziest out of touch with the community I’ve heard so far. Why on earth should we the $Lunc investors pay for this
— LUNC Burn (@LunaBurn_13) October 4, 2022
The LUNC burn tracker noted that the plan would not be as easy as it seems as it will require the token to get listed on exchanges which is an uphill task. Additionally, he noted that the potential price dump would force most holders to sell before that time. So instead, LUNC Burn has urged the community to consider a proposal that Tobias Andersen is working on that will re-peg USTC, albeit slower.
LUNC DAO, a popular community validator also lending its opinion on the proposal, said it was a “bad idea.” Additionally, the validator highlighted that burning remains the primary narrative driving revival.
Plans to mint more $LUNC tokens are intuitively a bad idea because reducing the supply by burning has been the primary narrative behind the entire revival
— 🔥🙏 𝕃𝕌ℕℂ 𝔻𝔸𝕆 🙏🔥 (@LUNCDAO) October 3, 2022
Notably, as responses continue to pour in, one of the proposal’s authors and LUNC core developer, Edward Kim, has called on the community to keep the feedback constructive, urging others to submit their repeg proposals for the community to decide.
Alex came forward with a very well thought out proposal and I support and applaud his efforts. Zaradar has a different proposal and I support him too. I encourage others to bring their ideas to the table so we can all weigh the pros and cons. Please keep it constructive.
— Edward Kim (@edk208) October 4, 2022
It bears mentioning that Kim is also the author of the proposed 1.2% tax burn proposal recently passed by the community to reduce the LUNC supply from 6.9 trillion to 10 billion. Notably, the burn is yet to live up to the expectations of many. For example, TerRarity.io data shows that the tax in nearly two weeks has burnt only about 3.8 billion LUNC. Moreover, LUNC Burner estimates that it will take 25 years to reach the 10 billion supply target at the current burn rate.
Despite this, the community has been given a boost with support from Binance to burn all trading fees obtained from LUNC pairs. The leading exchange on Monday disclosed that it burned about 5.5 billion LUNC from trading fees between September 21 and October 1.