The community passed the latest USTC re-peg proposal, triggering renewed hope for Terra Classic (LUNC) on its journey to the $1 price target.
The latest proposal to enforce measures for the re-peg of Terra Classic USD (USTC) has just passed, triggering renewed hope for the Terra Classic community on LUNC’s journey to the ultimate price target of $1.
As previously reported by The Crypto Basic, proposal 11487 suggests the implementation of divergence fees, USTC buybacks, and a swap and staking mechanism to help increase USTC’s price to $1. The proposal also aims to implement these measures to maintain the stablecoin’s peg to the dollar once it hits $1.
The Terra Classic community recently passed the proposal following deliberations arising from varied opinions on its feasibility. As of press time, 49.24% of votes have picked “Yes,” while only 6.68% of votes have gone to “No.”
The majority of validators and community members who have opposed it stressed that it might be near impossible to get the consent of centralized exchanges on its implementation. The proposal would require CEXs to implement divergence fees on USTC sell orders below or above $1.
While the proposal specifically looks to re-peg USTC, its passing has influenced renewed hope among Terra Classic proponents regarding LUNC’s journey to an ultimate price of $1. Recall that the death spiral across the Terra ecosystem last May was triggered by the USTC de-peg event, which led to an uncontrolled minting of LUNC and an extensive supply.
How the Proposal Affects LUNC
Notably, the USTC re-peg proposal also includes a mechanism to reduce the circulating supply of LUNC. The proposal seeks to procure profit from divergence fees levied on sellers who try to buy USTC below the peg and then use 45% of those procured USTC profits to swap for LUNC. The resulting LUNC will then be burned or staked to take it out of supply.
The Terra Classic community has repeatedly emphasized the importance of burning and staking in LUNC’s journey to the $1 price target. However, these measures have not been as effective as hoped due to low implementation. For instance, at the current burn rate, it would take the community five years to burn just 5.7% of LUNC’s supply, per data from TerRarity.
LUNC is currently trading for $0.0001121 as of press time. Hitting $1 would mean an 89,196x surge. While this target appears improbable shortly, the crypto scene has noticed bigger surprising surges. LUNC’s goal to hit this target would require efforts from all angles, including the USTC re-peg mechanism.
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