The Terra Classic community has greenlit a proposal to burn 800 million USTC, a significant development following extensive debate. This decision, documented in Proposal 12073, aims to reduce the circulating supply of USTC, potentially impacting its price in the long term.
Proposal Details and Community Vote
Proposal 12073 garnered significant community participation, exceeding the necessary “pass threshold.” This vote authorized the burning of 800 million USTC, valued at approximately $32 million, from the Risk Harbor multisig wallet (formerly known as the Ozone Protocol multisig wallet).
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Here’s the voting breakdown:
Yes: 40.90%, No: 7.32%, No with veto: 7.82%, Abstain: 43.96%
Among the 58 participating validators, 42 voted in favor, while 11 abstained, and 5 voted against or with a veto. Notably, top validator Allnodes abstained, allowing the community to proceed with the burn. The proposal received overwhelming support when it was launched, and now the community can destroy the tokens.
Burning Mechanism and Potential Impact
The approved proposal lets the community use code to migrate the 800 million USTC from the Risk Harbor multisig contract to a new code version through a contract migration proposal.
This process leverages a migration handler, which automatically handles any applicable taxes associated with the burn transaction. As emphasized by Fragwuerdig, a former developer for the Joint L1 Task Force (L1TF), this methodology will not alter the overall state of the Terra Classic blockchain.
Burning a significant amount of USTC could potentially influence its price by reducing supply, potentially leading to increased scarcity. Token burning is the primary strategy to increase LUNC’s price. However, it is crucial to acknowledge that the long-term impact on the price remains uncertain and is subject to various market forces.
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Market Reaction and LUNC and USTC Price Movement
Following the proposal’s approval, the price of USTC experienced a temporary surge of 25%, reaching a high of $0.040. Although it has dropped 4.53% over the past 24 hours, USTC is still up 19.48% from the past week. The stablecoin is currently trading at $0.03535.
LUNC is trading at $0.0001297, showing a 6.88% increase over the past week and a 1.14% increase over the past 24 hours. This upward movement potentially reflects renewed investor confidence, and with more proposals on the way, we could see more surges soon.
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