To determine the circumstances of the USTC de-peg and simulate a probable re-peg event, the Terra Classic (LUNC) L1 team intends to set up a test environment. The L1 Joint Task Force (L1JTF) is working to establish a test environment where different concepts for facilitating the USTC re-peg and bringing USTC to $1 can be explored.
The L1JTF’s project manager, LuncBurnArmy (LBA), recently shared a link to the dedicated Agora text in a tweet that promoted the idea.
The text claims that no extra community funds are needed because the proposal will use funds already set up for the L1 team. With a portion of the computing funds allotted to them for the Q2 work, the L1JTF intends to finance the development of the USTC test environment.
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What Does This Mean for Terra Classic Ecosystem?
One of the key goals of the revitalization goal, along with reducing LUNC’s abundant supply, is to restore USTC’s peg to $1, and the L1 Task Force believes that developing a USTC test environment will allow them to examine various ideas and ways for doing so.
Notably, the LUNC community has seen a lot of proposals intended to speed up the re-peg. One such proposal called for punishing USTC dealers who try to sell the asset for less than the peg (i.e., $1) by utilizing a divergence mechanism. The idea also attempts to enforce and maintain the re-peg through buybacks and swaps.
The L1 Team wants to test how these suggestions function in the real world. They can replicate different scenarios in the test environment and gather information on how USTC responds to various market circumstances.
The Potential Uses of the USTC Test Environment
- Reproducing the de-peg event and putting to the test potential capital constraints that could have stopped or lessened the “death spiral” that it triggered. The maximum supply of USTC is one instance of such a regulation.
- Identifying the best method and timeframe for accomplishing it while simulating a re-peg occurrence. This would entail implementing the divergence charge concept discussed earlier and using a volume-based technique with a deflationary fee.
- Evaluating fresh approaches to keeping the USTC peg and offering rewards to stakeholders and holders of USTC. This entails reviewing the Oracle module’s funding and looking into the USTC staking possibilities.
If the application is approved, the community will have given its consent for the L1 Team to use the test environment’s Q1 compute budget. If this occurs, the team will spend most of Q3 working on the USTC re-peg development. Meanwhile, Such an emphasis will rely on community support and input.
LBA highlighted that until the Terra Classic upgrade to v2.1.0, intended to bring parity with the Luna 2.0 and the Cosmos blockchains, has been implemented, the team will not move forward with the USTC test environment. On May 17, the L1 team successfully updated the network to v2.0.1. The v2.1.0 upgrade is consequently planned for June 14.
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