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What is TerraClassicUSD (USTC)?
TerraClassicUSD (USTC) is a decentralized algorithmic stablecoin that was originally designed to maintain a 1:1 peg with the US dollar on the Terra blockchain (now Terra Classic). It utilized a complex system of algorithmic adjustments and incentives to maintain the peg.
Important Note: Due to a de-pegging event in May 2022, USTC no longer maintains a stable value with the US dollar. Its price fluctuates significantly.
How TerraClassicUSD (USTC) Worked (Formerly)
- Minting and Burning Mechanism: Users could mint new USTC by depositing collateral in LUNA (the native token of Terra Classic) and burning USTC to redeem their LUNA collateral.
- Seigniorage Shares (LUNA): Staking LUNA tokens provided rewards and helped absorb price fluctuations of USTC.
Current Status of USTC
- De-pegged: USTC’s price is no longer pegged to the US dollar and has significantly lost value.
- Limited Functionality: The future use cases and functionality of USTC within the Terra Classic ecosystem remain uncertain.