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$USTC: Terra’s New Stablecoin Worth Less Than $0.02

The USTC is Terra’s UST rebrand traded on the old Terra Classic blockchain. Several assets, including LUNC and Bitcoin back the algorithmic stablecoin.

As the Terra community was hit with the unexpected downfall of TerraUSD (UST) stablecoin in 2022, they responded by creating USTC, or Terra Classic USD. 

This new stablecoin promises enhanced resilience and a renewed commitment to maintaining parity with the US dollar. However, there are some concerns regarding its existence, especially since its inability to repeg to $1 like other stablecoins. 

What is USTC?

$USTC, or Terra Classic USD, is the latest algorithmic stablecoin introduced by the Terra community. This innovation emerged following the collapse of UST, which depegged from $1 to $0.69 in May 2022. In simple terms, USTC is the rebrand of UST and is only traded on the old Terra Classic blockchain.  

Stablecoins like USTC are crucial in the digital economy by building a fully Decentralized Finance (DeFi) ecosystem. Unlike USDC and USDT, they are not controlled by centralized companies. 

They aim to hold a consistent value by anchoring their worth to reserve assets, typically fiat currencies like the US Dollar. USTC was born to offer a more dependable and resilient alternative to the former UST, which was challenged by its complex algorithmic backing.

How does USTC work?

Unlike its predecessor UST, which was susceptible to the "death spiral" attack leading to massive sell-offs and jeopardizing user redemptions, USTC bolsters its defenses by mandating users to deposit LUNC (Luna tokens) to produce USTC. 

By doing so, there's always a reservoir of LUNC ready for USTC redemption, ensuring resilience even if USTC's price dips below the $1 mark. Further, USTC is backed by a basket of assets, including LUNC, the native token of the Terra Classic blockchain, and Bitcoin. This means that USTC is not entirely reliant on algorithms to maintain its peg to $1 once the repeg is achieved. 

How Big is USTC?

At this juncture, it's challenging to gauge the exact magnitude of USTC's success. But several distinctions set USTC apart from UST:

1. Resilience & Stability: USTC employs a basket of assets as its backbone, differing from UST's reliance on intricate algorithms and incentives. This structural change equips USTC with excellent stability and robustness against potential threats.

2. Blockchain Foundation: While UST utilized the Terra blockchain, USTC is built upon the Terra Classic blockchain. Following UST's downfall, the original Terra blockchain was forsaken, but Terra Classic remains active.

3. Exchange Presence: USTC has gained support and significant presence from top platforms, including Binance and Kucoin, making it easily accessible to the public.

While USTC's journey has seen its value linger below the $1 mark, optimism persists within the Terra community. They believe that despite initial hiccups, USTC holds the potential to breathe new life into the Terra ecosystem. 

As of writing, $USTC is trading at $0.0149, down by 0.82% in the last 24 hours. 

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