The most recent proposal to restrict the Terra Classic USD (USTC) re-peg has been approved by the Terra Luna community. This development occurred earlier in the week and is expected to provide a boost to the price of LUNC.
The proposal named 11487 is aimed towards providing a framework to repeg the price of USTC to $1. Some of the measures proposed includes enacting divergence fees, USTC buybacks and a swap and staking system.
Related Reading: Terra Classic (LUNC) Up 4.02% in the Last 24 Hours; What’s Next?
Proposal Passed After Community Vote
The proposal was not without controversy as a majority validators and community members who were against it emphasized how difficult it might be to persuade centralized exchanges to agree to its deployment.
The proposal would compel CEXs to impose divergence charges on USTC sell orders valued at less than or equal to $1. In addition a mechanism to reduce the amount of LUNC in circulation is included in the USTC re-peg proposal. The plan is to profit from divergence fees assessed to sellers who attempt to purchase USTC below the peg and then exchange 45% of those USTC profits for LUNC.
To remove it from the supply, the resulting LUNC will subsequently be staked or burned. This according to the proponents was crucial to LUNC’s effort to reach the $1 price target. Eventually a vote was cast and 49.24% of votes were in favor of the measure, while 6.68% were against it.
Will LUNC Hit $1
Recall that the USTC de-peg event, which resulted in an uncontrolled minting of LUNC and an ample supply, caused the death spiral over the Terra ecosystem in May. Nevertheless the LUNC community has been trying to reduce the total supply of the token with poor results.
For instance, according to data from TerRarity, the community would need five years to burn just 5.7% of LUNC’s supply at the current burn rate. However the passage of this proposal will greatly impact the supply of LUNC and this could lead to high demand for the token driving its price up to $1 desired mark.
At the time of writing, Terra Classic is up 2.01% in the last 24 hours. The current price of Terra Classic is $0.000111.
LUNC is up 2.01% in the last 24 hours. Source: @Coinmarketcap
The price would have to increase by 89,196 times to reach $1. Although this target seems improbable, the crypto scene has seen more significant unexpected surges.
It would take work from all sides, including the USTC re-peg mechanism, for LUNC to reach this goal.
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