Back in 2022, the collapse of Terra LUNA and de-pegging of UST Classic (USTC) rocked the crypto market and led to a massive crash. Since then, the once stablecoin pegged to the US dollar has been trading more than 98% below $1. But the community has never really given up hope, passing a new proposal to burn more tokens in a bid to reclaim the dollar peg.
Terra Community Wants To Burn 800 Million Tokens
Of note in the Terra community’s move to burn 800 million USTC tokens are two proposals that were submitted for voting in the space of two days. The second proposal (Proposal 11660) launched on July 31 was more of a support to the first one (Proposal 11658) that was submitted on July 30.
Basically, Proposal 11658 asked that the controversial 800 million USTC tokens should be returned to the community pool. And Proposal 11660 asked that all of the tokens be sent to a burn address once they were returned to the community pool.
Both proposals received overwhelming support from the Terra community with Proposal 11658 and Proposal 11660 passing with a 70% and 82.55% vote, respectively. Following the end of voting, the community now awaits the return of the funds to the community pool and the subsequent burn.
Other community members have come forward in support of the burn. One X (formerly Twitter) user posted a screenshot from Terra founder Do Kwon. In the post made in 2021, Kwon advocated burning all the UST (Now USTC) in the community pool. The founder explained that “There’s just too much wealth there, and at some point, this will prove to be a liability for the whole ecosystem.”
Token price trading 98% below $1 peg | Source: USTC/BUSDT on Tradingview.com
Another proposal (Proposal 11675) is currently undergoing voting to alter the Terra blockchain to ensure that the 800 million USTC tokens are just erased from circulation forever. The proposal is actually not faring as well as the previous ones though, with 38.91% voting Yes, 24.24% voting No, 20.77% voting No with Veto, and 16.08% choosing to abstain. So far 40.9% of the community has voted.
Will USTC Reclaim The $1 Peg?
The passage of both proposals is no doubt in an effort to push USTC back toward a possible re-peg with the US dollar. It is already established that a USTC re-peg is no small feat. However, burning 800 million tokens is a step in that direction.
Once completed, the token burn would see about 8.1% of tokens removed from the 9.8 billion total supply of USTC. This would translate to a significant decrease in available supply, likely leading to an increase in price in response. So it’s possible that the price of the altcoin could cross $0.02 in the near future.