June 19, 2024
Terra Validator Protests USTC Burning, Pushes for Alternative Plan to Reclaim Dollar Peg

A Terra Classic community member with the ax handle Rexys has taken action against burning USTC tokens to enable the stablecoin to recover its dollar peg.

According to X post made on 18th SeptemberRexys has outlined an alternative solution that could see USTC be valued at $1 again and also allow the price of Terra Classic (LUNC) to reach the $1 price mark.

Since the collapse of the Terra ecosystem in 2022, the USTC stablecoin has lost its dollar peg and is now trading 98.8% below the $1 mark.

Following this catastrophic event, members of the Terra Class community have continued to submit various proposals to burn more USTC as a deflation mechanism that could result in the stablecoin recovering its dollar peg.

Currently, the Terra Classic community is voting on a proposal that aims to instruct the Binance exchange to start burning 50% of USTC every month. It is believed that if the world’s largest exchange helps reduce the circulating supply of USTC, it could accelerate the token’s rise to $1.

Community member says reverse split is more efficient than burying tokens

According to Rexix, burning USTC tokens may not be the best way to reclaim the stablecoin’s dollar peg. Terra Classic community members point out that there are currently 9.8 billion USTC tokens in circulation, and users would need to burn massive amounts of USTC to record any significant increase in value.

Alternatively, Rexys proposes that the Terra community implement a reverse split of USTC tokens, leading to a revaluation of the stablecoin, albeit at some investment cost.

In this proposal, Rexys gives an example, stating that if 100 USTC is currently worth $1, a 100/1 reverse split would convert 100 USTC into just one USTC token, which would now be worth $1. Through this mechanism, USTC holders retain the current value of their holdings, with no need to burn more tokens.

However, Rexys says the reverse split will wipe out all existing network debt. This means that USTC investors stand to forfeit any losses incurred during the collapse of the Terra ecosystem.

Can USTC reverse split save Terra Classico ecosystem?

Interestingly, Rexys also said that the revaluation of the USTC token could trigger the recovery of the Terra Classic network. The community member pointed out that once USTC regains its dollar peg and the LUNC-USTC swap mechanism is tested with the implementation of better capital controls, investors can begin burning trillions of LUNC. .

Related Reading: USTC Surprises With Nearly 60% Rally – What’s Going On?

Rexix believes that this will cause a massive increase in the value of LUNC, and the altcoin could even record new all-time highs. Rexys advises the Terra community to “pin” their hopes of recovering past losses by implementing the USTC reverse split and investing in LUNC, which has lost 99.9% of its market cap in 2022.

However, members of the Terra Classic community say that this initiative should be implemented upon research and approval by relevant experts.

USTC is trading at $0.012 on the hourly chart. Source: USTCUSDT chart on tradingview.com

Display image from Analytics Insights, chart from TradingView

source: www.newsbtc.com

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