A recent vote by the Terra Classic community has resulted in a halt of the creation and recreation of TerraUSD Classic (USTC) tokens, a stablecoin that was supposed to be pegged to the U.S. dollar. The aim of this decision is to restore the stability of USTC and protect the interests of the community and external investors by reducing its supply.
The vote was not unanimous, as 59% of the community supported it, while about 40% opposed it. The vote was triggered by a major crisis that occurred in May 2022, when USTC lost its connection to the U.S. dollar, causing a huge loss of value for Terra, especially for Luna Classic (LUNC), which was dependent on USTC. LUNC's value dropped by almost 100%, leading to a widespread crash in the cryptocurrency markets and a loss of around $40 billion in total market capitalization.
The halt of USTC tokens will require major cryptocurrency exchanges to burn USTC tokens. Moreover, the decision will allow institutions like Binance to start burning USTC, since there will be no more minting and reminting activities. This decision comes after the Terra Classic community faced an increase in spam messages following the decline in LUNC prices.
Furthermore, as reported by Cointelegraph on September 10, the community was also voting on other proposals, such as one to increase the minimum deposit requirement from 1 million LUNC to 5 million LUNC. This proposal was approved on September 16th with a massive 93.22% support.
