TerraClassicUSD (USTC) is a decentralized, algorithmic stablecoin issued on the Terra Classic blockchain, designed to be pegged to the US dollar. It was formerly known as TerraUSD (UST) stablecoin and was issued on the old Terra blockchain, which rebranded to Terra Classic after the stablecoin's de-pegging from the USD in May 2022.
The old Terra chain was renamed Terra Classic, while the current Terra blockchain, or Terra 2.0, moved beyond stablecoins to support Web 3.0 and decentralized applications (dApps). Meanwhile, the Terra Classic network supports TerraClassicUSD (USTC), using LUNA Classic (LUNC) for price stability.
Terra Classic blockchain uses the LUNC crypto to ensure the price stability of the USTC stablecoin. As of August 2022, however, due to the extremely high circulating supply of LUNC in the crypto market, the current price of TerraClassicUSD remains de-pegged from the US dollar, well below the $1 value.
The Terra Classic community has been burning LUNC crypto to reduce its circulating supply in an attempt to restore the USD peg for the USTC coin. Although, from a total supply of more than 6.9 trillion, the circulating supply has only reduced to under 6.6 trillion by August 2022.
South Korea's Terraform Labs, the firm behind the development of the Terra Classic ecosystem, and the Luna Foundation Guard aim to maintain the TerraClassicUSD price as close to the US dollar as possible despite market volatility with the help of LUNA Classic (LUNC) - the blockchain’s native digital asset. The USTC stablecoin employs a different mechanism from several popular rivals through algorithms instead of being backed by actual dollar reserves.
An increase in demand for the USTC causes the algorithms to increase the burn rate of LUNC tokens to maintain the peg to the USD. On the other hand, if the demand for TerraClassicUSD falls in the market, the burn rate of LUNC tokens slows down, preventing the USTC price from getting close to the USD peg. Eventually, after the Terra Classic protocol succeeds in bringing back the USTC’s peg to the USD, it will resort to minting more LUNC tokens as the demand for its stablecoin falls to maintain its price stability.
Once the TerraClassicUSD crypto reclaims the dollar peg, Terra Classic will mint new USTC by burning LUNC. The decline in the supply of LUNC ensures the USTC price remains pegged to the USD while adding to the circulating supply of TerraClassicUSD.
The Terra Classic blockchain employs a proof-of-stake consensus mechanism in which nodes stake LUNC to counter volatility in the TerraClassicUSD peg. The Terra Classic network uses a seigniorage process to maintain the price stability of its stablecoin even as its total supply fluctuates in the market.
The Terra blockchain was initially created in January 2018 to increase the adoption of cryptocurrencies as a payment method worldwide. This led to the establishment of the Terra Alliance, consisting of 15 large e-commerce businesses across Asia, to bootstrap the development of the Terra network infrastructure.
The Terra blockchain was founded by Do Kwon and Daniel Shin in April 2019, along with its native token LUNA. The TerraUSD stablecoin followed several months later, in September 2020.
In less than two years since its launch, the stablecoin ranked as the third largest stablecoin by market capitalization, overtaking established players including BUSD and DAI. Right from its inception, Terra visualized the USTC to function as an interchain digital asset, operating on multiple blockchain ecosystems and allowing DeFi to scale.
Following the market crash, Terraform Labs announced rebranding the old Terra blockchain or Terra 1.0 to a new chain, Terra Classic, and its digital assets from LUNA and UST to LUNA Classic (LUNC) and TerraClassicUSD (USTC). The new Terra ecosystem now supports several of the old dApps that migrated from the Terra Classic network. Both Terra and Terra Classic are PoS chains.
You can use TerraClassicUSD in several ways, including:
Most decentralized finance (DeFi) platforms offer attractive yields and returns on lending liquidity to USTC pools. Lock your USTC holdings for a specific period in the liquidity pool to generate a lucrative stream of passive income and make your USTC investment work for you.
Several exchanges have started offering crypto pairs with TerraClassicUSD as the base currency. Buy or sell TerraClassicUSD against other digital currencies or hold it long-term if you believe in the future potential of the stablecoin and Terra Classic project. Check the current price of TerraClassicUSD, USTC live market cap, current circulating supply, and 24-hour trading volume, and perform technical, sentiment, and fundamental analysis on the USTC price chart before you trade TerraClassicUSD.
Making online payments for purchasing goods and services using TerraClassicUSD is highly convenient. For businesses that support crypto payments, using a stablecoin such as the USTC is far more convenient than using other crypto assets for transactions.
In addition, the low transaction fees on the Terra Classic blockchain also make it a cost-effective way to transfer money to users anywhere in the world. Send USTC from your wallet to other users’ crypto wallets to conduct fast and cheap transactions.
TerraClassicUSD is one of the few algorithmic-backed stablecoins in the crypto market but has struggled since the collapse in May 2022. Due to excessive minting of new tokens on the former Terra ecosystem, USTC and LUNC have extremely high circulating supply, exerting downward pressure on both tokens’ value and causing major losses to previous investors.
An uptick in investor confidence could help the USTC climb back towards the $1 level in the future, restoring the peg to the US dollar. Such a move could encourage higher adoption of stablecoin among users and projects.
In addition, this could also encourage more developers to design and deploy dApps on the Terra Classic blockchain, utilizing the USTC coin. Such a boost to the Terra Classic ecosystem could also increase the burn rate of LUNC in the market, contributing to upward movement in the TerraClassicUSD price.
On the downside, you could be cautious about investing in the USTC crypto due to the potential regulatory challenges the project will likely face. The Terra brand is yet to recover from the collapse of the old UST stablecoin and LUNA 1.0, which hold back its re-pegging efforts, making it a digital asset to wait and watch before investing.
Before its collapse, the TerraUSD (UST) was the largest algorithmic stablecoin in the crypto market and the third-largest stablecoin in the entire sector. However, the UST lost its peg to the US dollar in early May 2022 when whales or large crypto holders started moving UST liquidity out of Anchor Protocol.
Anchor Protocol was one of the most popular DeFi platforms that offered attractive returns on lending UST, going up as high as 19.5%. However, the issue built up even before this when there were more lenders of UST on the platform than users borrowing UST, leading to an imbalance. The imbalance made the high yields offered by Anchor Protocol unsustainable.
The sharp sell-offs in May triggered panic among UST investors who dumped the stablecoin, causing the Terra blockchain to frantically mint more LUNA to attempt to re-stabilize the peg to the US dollar. This failed when the LUNA price also crashed while UST headed further away from the $1 mark, leading to an implosion in Terra’s star crypto assets.
The events of late May 2022 resulted in investor losses estimated at over $40 billion. While Terra’s founders announced a revival plan that involved the creation of a brand new Terra blockchain and rebranding Terra 1.0 to Terra Classic, as of August 2022, Terraform Labs is yet to restore investor faith in its stablecoin, now known as TerraClassicUSD (USTC).
As of August 2022, the total supply of USTC crypto stands at a little over 10.25 billion tokens. The circulating supply of the TerraClassicUSD stablecoin is just above 9.8 billion.
The high circulating supply of the USTC token is also a key reason the stablecoin has remained de-pegged from the US dollar. As more tokens are destroyed amid strong crypto adoption, the market capitalization of USTC could remain supported and help the TerraClassicUSD price bounce back to $1.
The following are the critical differences between TerraUSD (UST) and TerraClassicUSD (USTC) stablecoins:
The UST stablecoin functioned on the old Terra network. Following the market crash in May 2022, Terraform Labs rebranded this blockchain to Terra Classic, while its stablecoin UST was rebranded as TerraClassicUSD (USTC).
The company then launched a new blockchain network called Terra, which no longer supports stablecoins. Its native digital token is also called the LUNA. Meanwhile, the old Terra blockchain’s native asset LUNA 1.0, has been rebranded as LUNA Classic (LUNC).
The former UST stablecoin used to be a highly popular stablecoin in the crypto market, ranking third at its highest in terms of trading volume, market cap, and usage in April 2022. The TerraUSD stablecoin had successfully managed to maintain its peg to the US dollar until the market crashed in May 2022.
Before the collapse, the former TerraUSD crypto was among the top 10 cryptocurrencies by market cap. The highest ever market cap for the UST crypto was over $9 billion when its adoption touched a record high in December 2021.
On the other hand, the market rank of the TerraClassicUSD coin stands at 112 as of August 2022. The market cap of the USTC token holds at just under $317 million at the time of writing.
The TerraClassicUSD (USTC) value is yet to touch the $1 mark as of August 2022 following the rebranding efforts, t. The inability of USTC to reclaim its peg to the USD stems from the extremely high circulating supply of USTC and LUNC tokens in the market. At the same time, its adoption among users remains far lower than its previous version once enjoyed.
You can generate a stream of passive revenue by staking UST. Several leading crypto platforms offer attractive passive income potential on your TerraClassicUSD holdings. Here’s how to stake USTC for attractive returns:
1. Perform online research to find the platforms (CEXs and DEXs) that offer APYs on staking USTC.
2. Review their performance, feedback, and interest on offer before selecting the right platform you wish to stake TerraClassicUSD with.
3. Create an account on the platform and fund your wallet with USTC purchased via KuCoin or other sources.
4. Head to the Stake or Staking section of the platform, enter the number of USTC coins you wish to stake, and select the duration you want to lock your holdings for.
5. Review all details of the transaction before confirming the staking process.
6. Once your order is processed, sit back, earn rewards for staking USTC and grow your crypto holdings conveniently.