The Terra Classic (LUNC) community recently rejected a significant proposal to burn 800 million USTC, opting instead for alternative paths for reducing the circulating supply. This decision stems from concerns about the proposed method’s technical complexities and potential legal implications.
The rejected proposal, known as “RH MultiSig Wallet – Burn 800m via Update to Terrad Client” (Proposal 11913), aimed to directly burn the dormant USTC held within the Risk Harbor (formerly Ozone Protocol) multisig wallet.
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However, it garnered only lukewarm support, receiving just 14.24% “Yes” votes and a significant 50.02% “Abstain” vote. 25.18% voted “No” on the proposal, and this lack of enthusiasm reflects the community’s apprehension towards the proposal’s reliance on a client update, potentially exposing validators to unforeseen legal risks.
Like most proposals in the Terra Classic ecosystem, proposal 11913 was created to aid the Terra Classic revival. Proponents envisioned the burning of these funds, originally designated for USTSC peg protection, as a potent symbol of commitment and unity.
With the rejection, the wallet’s 800 million USTC now sits frozen, inaccessible due to lost keys and a communication blackout with its owners, Risk Harbor.
The statement in the proposal argued that recovering the funds was no longer feasible. Given the lost keys and severed communication, they believe blacklisting the wallet, which was passed in Proposal #11832, no longer served its purpose.
Despite the rejection, the community remains committed to USTC burn initiatives. A prominent alternative proposed by validator Lunanauts involves creating a contract to burn these funds from the Risk Harbor wallet.
This approach circumvents the need for a client update, mitigating legal concerns and paving the way for a smoother burn process. Additionally, further discussions in the Terra Classic Commonwealth forum offer various other proposals for tackling the circulating USTC issue.
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The market has reacted negatively to this development. LUNC has dropped 8.23% in the past 24 hours and is trading at $0.0001509 at press time. USTC, which currently trades at $0.03261, has seen an 11.15% price plummet in the last 24 hours.
Despite the price decline, USTC has seen an impressive 48.12% surge in trading volume, currently at $38.59 million. LUNC was not left out, showing a 34.25% surge in trading volume 24 hours to $107 million. This active participation from the community could help LUNC price in the long run, despite the recent failed proposal.
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