USTC repeg remains a top ambition for the layer-1 developers in the Terra Classic community as it is believed to be an important catalyst for the recovery of the underperforming LUNC token. Thus, the Terra Classic Layer-1 Task Force has teamed up with a newly formed quant team to begin development toward repegging USTC.
The L1 development team project manager LuncBurnArmy (LBA) disclosed this in a Monday Twitter thread, stating that the decision to partner with the quant team to work on repegging the collapsed stablecoin USTC emanated after a productive call with the ex-Terra Rebels member Redline Drifter.
Recall that the Terra Classic L1TF completed the parity upgrade on June 14 and is preparing to submit a proposal for Q3 tasks. Accordingly, the L1 project team manager LBA wrote, “As a part of our Q3 proposal, we will be removing the ‘reserve architecture / design’, and other USTC items, with the exception of the market module, which we intend to test extensively in the testnet.”
6. The L1 team will include the 'support of the quant team' in the Q3 proposal, as we believe that USTC is an important component of recovering the Luna Classic ecosystem.
— 🔥LuncBurnArmy🔥 (@luncburnarmy) June 19, 2023
USTC repeg development
Per the update, the L1 developer group has decided to work on the passed proposal earlier submitted by Drifter. In the proposal, which suggested the use of a divergent tax protocol and buy & burn mechanism to achieve a USTC repeg, LBA discussed the possibility of centralizes not agreeing to the divergence tax strategy.
Hence, he asked that the quant team consider alternative funding methods for the reserve as well as the architecture and design of the reserve, in case CEXs do not support the divergence tax. “This would include the proposed assets for the reserve, how the reserve would be managed, and how it may be possible to automate the defense of the peg using the reserve assets,” he wrote.
In particular, the L1 development team project manager stressed that the quant team would “spend 60-70% of their time on the modelling of the divergence tax, but then spend the remainder of their time on the identification of other mechanisms to fund the reserve that are not dependent on CEXs.”
As part of the USTC development process, the L1 team would be working on testing the market module during the third quarter of 2023, as that would be beneficial for the work of the quant team.
“We discussed adding the fact that the L1 team will be working on testing the market module during Q3, and that it would be beneficial for the quant team to model any scenarios we identify for them through our testing,” LBA said, adding that the L1 team is excited to work with the newly formed quant team and will seek to support any of their proposals that passes community governance voting in the future.
Following the latest developments in the Terra Classic ecosystem, community members speculate that the LUNC price could rise as high as 40% from its prevailing low value.
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