- Terra Classic supporters have proposed a plan to re-establish USTC's peg with US dollar.
- A community member, "Redlinedrifter," submitted the proposal with key insights about TerraUSD.
- While it's not the first move by Terra community to revamp the stablecoin, USTC surged around 10% on the news.
TerraUSD (USTC), the famous algorithmic stablecoin that has since been renamed from UST, depegged from the US dollar around a year ago, causing the Terra ecosystem to collapse in its wake. In the latest development, suppers of the Terra Classic blockchain are devising a plan to revive the ecosystem by restoring its attachment to the USD.
Terra Classic community to restore USTC peg
In a recent proposal from a Terra Classic community member going by 'Redlinedrifter', the Terra Classic blockchain advocate is among those looking to revive the ecosystem of the algorithmic stablecoin by restoring the USTC token's value parity to the USD.
Focusing on "USTC incremental re-peg, buybacks, staking, and swaps," the proposal headlines:
USTC Repeg and Revitalisation of the Terra Classic Ecosystem through the Implementation of an Algorithmic Peg Divergence Fee & Buyback Protocol, Unidirectional Swaps and USTC Staking.
In the proposal, Redlinedrifter affirmed that while Do Kwon's decentralized money creation was a positive initiative, "serious issues need to be addressed" for the community to re-establish the token's value peg with the USD.
Further, Redlinedrifter suggested the "Divergence Protocol" idea. Notably, the working mechanism of this protocol is that it "applies an algorithmic/dynamic fee equal to the difference between the peg and the market price." Accordingly, the innovative mechanism would implement a dynamic fee structure to impose a fee relative to the deviation between the $1 peg and the token's market value.
The divergence fee structure represents a new strategy for addressing previous challenges that prevented the USTC stablecoin's ability to maintain its USD peg. Redlinedrifter concludes the proposal by saying:
I believe this proposal outlines an approach to revitalizing our ecosystem in an equitable manner that will appeal to both USTC and LUNC holders.
The proposal is up for discussion for a week on Agora before the community member submits a signaling prop to proceed. Below is a representation of the amount of engagement received.
Not the first time
Efforts by the Terra community to revamp Do Kwon's stablecoin idea are not new. In October 2022, they introduced a new "soft-pegged stablecoin" concept built atop the Terra Phoenix network through a whitepaper.
TerraUSD price reacts with a 10% uptick
TerraUSD (USTC) price has reacted to the proposed development with a surge of around 10%, rising from $0.019 to an intraday high of $0.022 on Friday before falling back to the current price of $0.020. An increase in bullish momentum could solidify the uptrend for the once-stable token.
If the northbound move sustains, TerraUSD price would soon flip the 50-day Exponential Moving Average (EMA) at $0.021 into support. Sidelined investors coming in at this level could bolster the uptrend, leading USTC to the 100-day EMA at $0.024.
In a highly bullish case, TerraUSD price could soon tag the $0.025 resistance level, denoting a 20% ascent from current levels.
The upward move by the Relative Strength Index (RSI) also supports the bullish thesis, indicating a newly found price strength as traders embrace USTC. Further, the RSI had just sent a bullish signal when it crossed above the Stochastic RSI on April 28. Traders heeding this call to buy USTC could increase chances for a further upside.
USTC/USD 1-day chart
On the flip side, if investor interest in USTC wanes, TerraUSD price could face a rejection and pull back toward the $0.018 support floor.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Polygon joins forces with WSPN to expand stablecoin adoption
WSPN, a stablecoin infrastructure company based in Singapore, has teamed up with Polygon Labs to make its stablecoin, WUSD, more useful in payment and decentralized finance.
Coinbase envisages listing of more meme coins amid regulatory optimism
Donald Trump's expected return to the White House creates excitement in the cryptocurrency sector, especially at Coinbase, the largest US-based crypto exchange. The platform is optimistic that the new administration will focus on regulatory clarity, which could lead to more token listings, including popular meme coins.
Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B
As Bitcoin (BTC) gets closer to the $100,000 mark for the first time — it crossed $99,000 earlier Friday — capital is rotating into alternative cryptocurrencies, creating a buzz in the broader crypto market.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.