The crypto community is abuzz with shockwaves as Terra Classic (LUNC) experiences a staggering bullish rally, marking a remarkable turn of events not witnessed in recent months.
Between November 9 and 10, LUNC experienced an astonishing 45% surge, catapulting from $0.000064 to nearly eliminating a leading zero, settling at almost $0.0001. Simultaneously, its trading volume skyrocketed, soaring from an average of $30 million in the preceding days to an astounding $333 million.
Driving Force Behind the Surge
A pivotal proposal regarding USTC minting, which garnered approval from the LUNC community, seems to be the driving force behind the unprecedented surge in LUNC’s price. The community, with an overwhelming majority of 98.95% in favor, unanimously agreed to halt USTC “minting and reminting” by implementing a substantial increase in the Tobin tax, setting it at a hundred percent.
The Approved Proposal in Details
In a detailed statement released earlier this month, the Terra Classic Commonwealth portal emphasized that USTC enters circulation exclusively through the market module.
However, during a market crash, this mechanism was deactivated for LUNC to stablecoin pairs by raising the spread to 100%, effectively preventing swapping between LUNC and other stablecoins through the market module.
Additionally, the statement highlighted that when swapping stablecoins, the Tobin tax comes into effect instead of the spread. Setting the Tobin tax at 100% effectively disables the swapping functionality of the corresponding asset.
To enforce the proposed USTC minting disablement, the Layer One Task Force (LITF) team executed a code change introducing a new governance parameter designed to enable the setting of a “Tobin tax for swaps to USTC,” the sole action resulting in USTC minting.
Furthermore, considering the lack of a practical exit route from stablecoins other than USTC, discussions ensued about streamlining the process by elevating all Tobin taxes for all stablecoins to 100% instead of implementing a code change. The ultimate aim of the proposal was to render all market swapping and associated coin minting on Terra Classic non-operational.
The report outlined the potential advantages of this approach, citing the absence of a need for a software upgrade and preventing new USTC from entering circulation.
This significant development in Terra Classic’s governance structure marks a noteworthy milestone with implications for both the token’s value and its broader ecosystem.