An updated re-peg proposal to assist restructure Terra Classic USD (USTC) by generating a “algorithmic fungible token (AFT)” was released by Terra Rebels member Alex Forshaw on Monday in a tweet.
Forshaw, Edward Kim, and Maximilian Bryan’s proposal state that the Terra Rebels will establish a new AFT called USTN. The new currency, which resembles a stablecoin in most respects, will then be mostly backed by Bitcoin. Additionally, the group will provide holders of USTC an airdrop of the new coin.
However, the catch is that the Terra Rebels plan to mint 500 billion LUNC to purchase Bitcoin.
The group claims USTN will accelerate LUNC burns as a justification for the pain this plan will undoubtedly cause LUNC holders. In accordance with the proposal, about $5 billion in USTN adoption will burn approximately 2.5 trillion LUNC. It is noteworthy that the group believes it can be completed in a year.
Regrettably, the idea of minting more LUNC has not gone down well with many in the LUNC community, which has centered its rallying cry for revival on reducing LUNC supply.
Reaction From The Community
The proposal was described as “crazy” and “out of touch” by LUNC Burn, an unofficial Twitter account dedicated to tracking LUNC burn activity that has gained a large following in recent months. Considering the burn initiatives that have already been implemented, LUNC Burn believes it is a step backwards.
According to the LUNC burn tracker, the plan will not be as simple as it appears because the token will need to be listed on exchanges, which is a difficult task. Furthermore, he stated that the potential price drop would force the majority of holders to sell before that time. Instead, LUNC Burn has urged the community to consider a proposal being worked on by Tobias Andersen that will re-peg USTC, albeit slowly.
LUNC DAO, a popular community validator who also weighed in on the proposal, called it a “bad idea.” Furthermore, the validator emphasized that burning is still the primary narrative driving revival.
However, LUNC core developer Edward Kim, one of the proposal’s authors, has called on the community to keep feedback constructive, encouraging others to submit their repeg proposals for consideration.
It is worth noting that Kim also authored the recently passed 1.2% tax burn proposal to reduce the LUNC supply from 6.9 trillion to 10 billion. Despite many people’s expectations, the burn has not lived up to them. According to TerRarity.io data, the tax has burned only 3.8 billion LUNC in nearly two weeks. Additionally, LUNC Burner estimates that achieving the 10 billion supply target will take 25 years at the current burn rate.
While this is the case, Binance’s support of burning all trading fees generated by LUNC pairs boosts this community. During the period of September 21 to October 1, the leading exchange lost approximately 5.5 billion LUNC in trading fees.