TerraUSD

What is TerraClassicUSD (USTC)?

TerraClassicUSD coin is no longer functional stablecoin which runs on the Terra Classic blockchain. The previous functional version of the TerraClassicUSD coin was TerraUSD (UST). it was pegged to the US dollar at a 1:1 rate..

If you are interested in the current price of TerraClassicUSD, as well as its historical performance as of the 2022 crash, check out the USTC price chart above.

TerraUSD was an algorithmic stablecoin. It used LUNA, a floating parallel currency, to support its peg to the US dollar. TerraUSD holders could deposit their coins and profit through an experimental lending project called Anchor.

Anchor is a decentralized savings protocol that provides low volatility returns on TerraUSD deposits. Users were able to gain about 20% interest using the Anchor protocol. The rewards were collected using staking rewards from significant Proof of Stake (PoS) blockchains and interest paid by borrowers.

However, on May 9, 2022, the asset was untied and the price of TerraClassicUSD fell below $1. Why did this happen? People began trading their UST stored in the Curve pool for other stablecoins as soon as UST began trading well below $1.

Due to numerous large withdrawals from the Anchor and Curve cryptocurrency exchanges, the TerraUSD peg to the dollar began to completely fall apart.. Prices for LUNA and USTC fell to almost zero in a matter of days.

In an effort to stop the rapid decline of UST, Terra was forced to mint even more LUNA as a result of this downward price pressure. This ultimately led to a decline in the price of LUNA without re-establishing the UST peg. Unfortunately, Terra was unable to regain public trust in UST even after selling $1.5 billion worth of BTC from Terra’s treasury.

Do Kwon proposed a revival plan after the UST delinking. According to the plan, the Terra blockchain will be divided into two chains – a new version of Terra and an old one. Once the community approved this plan, most dApps running on the old version of Terra were eventually migrated to the new one.

The new blockchain is now called Terra or Terra 2.0, and the old blockchain has been renamed Terra Classic. Do Kwon claims that USTC tokens will not migrate to the new Terra blockchain. In addition, there are no plans to release a new version of the algorithmic stablecoin. Thus, the TerraClassicUSD token is effectively no longer a stablecoin, and the price of USDC is not expected to ever be pegged to the US dollar again.

Terra Blockchain

Looking at the Terra blockchain as a whole, it is important to note that it provides users with decentralized applications (dApps) and advanced tools for developers. Terra’s native symbol is LUNA. Additionally, Terra’s financial system is based on several stablecoins linked to popular fiat currencies.

Terra uses a Proof-of-Stake consensus mechanismwhich allows users Thus, stake LUNA tokens, gaining the right to manage validator nodes that approve and create new blocks of transactions..

In addition, Terra uses technologies such as Mantlemint, Terrain and Terra Station. Thanks to Terra’s permissionless and borderless economy, anyone with an Internet connection can access its products.

Talking about its products, Terra launched TerraSwap in November 2020, which is an AMM-powered DEX. Additionally, the Mirror Protocol was launched in December 2020. Essentially, the protocol is a synthetic asset exchange that uses mirror assets, known as mAssets, to track, issue and trade real assets. TO coinage and trading of mainstream assets on Terra, this was intended to increase the acceptance of TerraUSD.

Previous version of TerraClassicUSD (TerraUSD)

The creation of TerraUSD (UST) was intended to benefit the Terra community and provide DeFi with a scalable alternative in the face of severe scaling issues faced by other stablecoins. TerraUSD promised better cross-chain usability, accurate interest rates, and better scalability.

TerraUSD belonged to the Terra blockchain, which was founded in 2019 by Do Kwon and Daniel Shin.. In 2020, they launched the TerraUSD coin in collaboration with Bittrex Global. Do Kwon is a cryptocurrency developer. Before launching Terra, Kwon worked as a software engineer at Microsoft and Apple. Daniel Shin is an entrepreneur and economist. He also co-founded and led projects such as Fast Track Asia and Ticket Monster.

TerraUSD offered several advantages over its competitors. The main benefits it provided included it compatibility, passive income potential, exchange to TerraKRW and scalability.

Speaking of interoperability, TerraUSD used the Dropship bridge protocol, which integrated USTs into various DeFi platforms and allowed users to move USTs between different chains.

In terms of passive income, as mentioned earlier, the Anchor protocol used by TerraUSD allowed users to earn up to 20% interest on their UST holdings.

Additionally, TerraUSD could be exchanged for TerraKRW, a stablecoin pegged to the Korean won rather than the US dollar.

Lastly, TerraUSD is highly scalable thanks to its minting mechanism, as all you had to do was burn 1 LUNA token to issue a new UST token.

Unfortunately, after about 2 years of its existence, the TerraUSD crypto project failed. In a very short period of time, the price of TerraClassicUSD fell from $1 to almost zero.