Terra USTC surges 66% following approval to re-peg to $1

Terra Classic Stablecoin Terra UST (USTC) has surged over 66% following a governance approval to re-peg the stablecoin.

Similarly, Terra Classic (LUNC) is also up 17.3% on the news, according to CryptoSlate data.

On Jan. 3, the Terra Classic community passed a proposal to relink LUNA Classic and the de-pegged USTC stablecoin.

Proposal to relink LUNC and USTC

Following the collapse of Terra empire in May 2022, the algorithmic stablecoin UST and sister token LUNA collapsed below zero. In efforts to restore the ecosystem, the tokens were rebranded LUNA Classic (LUNC) and USTC.

The LUNC community has considered several proposals in efforts to restore USTC to peg. In the meantime, the proposal to relink USTC and LUNC has received governance approval.

The community proposal seeks to restore USTC to peg through a combination of strategies which includes:

• Holding reserves in multiple assets and currencies.
• Implementing a buyback and burn mechanism to regulate the supply and demand of USTC.
• Paying out interest in US dollars to incentivize holders to keep USTC when it is below peg and charge interest when the price is above peg.
• Integrating multiple oracle system that provides exchange rate data to reduce the risk of manipulation by a single oracle.

USTC is currently trading at $0.0399, however, the community is optimistic that the approved proposal will help restore the token to $1.