In a bid to revitalize Terra Classic (LUNC) and potentially see it rise back to the $1 mark, Rex, a dedicated Terra Classic community and TerraCVita member, has put forth a series of forward-looking proposals.
Following the Terra Collapse experienced last year May, the community has made numerous endeavors to re-anchor USTC (Terra’s stablecoin) and propel LUNC’s price above the $1 threshold. However, these previous initiatives have yielded little success. Rex now offers a roadmap to aid LUNC in its quest to reclaim $1.
Rex emphasizes that stimulating network expansion plays a pivotal role in driving LUNC’s price surge. He points out that the network has recently begun to draw in more developers.
According to Rex, making the new Terra Classic network code openly accessible, akin to Terra’s initial approach, could attract an influx of dApp builders to the network.
Moreover, by allowing builders to whitelist their dApp wallets, exempting them from the prevailing burn tax, the network could further entice developers. Nevertheless, Rex underscores the importance of the community’s support for builders to take the initiative.
Token Burning is Not The Recommended Approach
One recurring strategy within the Terra community has been the burning of USTC and LUNC tokens. While proponents have championed this token burn campaign, Rex questions its effectiveness.
Presently, there are 9.78 billion USTC coins in circulation. Rex asserts that a substantial number of these must be burnt before USTC can attain the $1 mark. A similar challenge looms for LUNC, but achieving this seems less likely.
Exploring Reverse Split Instead of Direct Re-peg
A proposal to re-anchor USTC is currently on the table, aiming to elevate its price from $0.01248553 to $1. If successful, this move would raise USTC’s market capitalization to $9.78 billion.
Rather than pursuing a direct re-peg, Rex suggests adopting a reverse split mechanism within the community. This mechanism would revalue the USTC stablecoin without inflating its market valuation.
In practical terms, if you hold USTC worth $100 (8,012.82 USTC at the current price), during the re-pegging process, you would receive USTC worth $100 (at a conversion rate of 1 USTC to $1).
This reverse split model would maintain USTC’s market cap at $97.8 million instead of an increase to $9.78 billion. However, holders of USTC would miss out on the potential 80x growth that could have taken USTC’s price from $0.01248551 to $1.
Related article: Terra Classic Community Pursues USTC Stablecoin Restoration
Prospects for LUNC Reaching $1
Following the successful re-pegging of USTC, Rex advocates for burning USTC to potentially boost LUNC’s price. This strategy would elevate the value of the Terra Classic oracle pool, subsequently leading to increased staking rewards.
The enhanced staking rewards would also serve as a magnet for more network investors. While LUNC staking becomes more profitable, the network’s bathtub curve model, which gradually declines over time, will prevent the oracle from being drained by large investors.
Although there are some drawbacks to the reverse split re-pegging approach, it presents LUNC with a greater chance of recovering its $1 value. As of now, LUNC is trading at $0.00005759 per coin. The USTC re-pegging initiative is also expected to attract more developers to the Terra Classic network.