TerraClassicUSD (USTC) is the previous TerraUSD (UST), a Terra blockchain decentralized algorithmic stablecoin. Following the May 2022 LUNA/UST crash, the blockchain was rebranded and the token was renamed.
Brief History of Terra Classic
To better understand Terra Classic, it is necessary to first understand the original Terra blockchain and the Terra Luna collapse in May 2022.
Stablecoin and Terra
Because of the cryptocurrency market's price volatility, there is a desire for price stability in order for crypto investors to conveniently trade, exchange, or invest. This demand prompted the creation of a cryptocurrency category known as stablecoins, the prices of which are frequently tethered to traditional fiat currencies, real-world assets, or other commodities such as US dollars, Euros, metal, and so on.
Terra was an open-source blockchain platform for an algorithmic stablecoin, TerraUSD (UST), that was 1-to-1 tied to US dollars before to its demise. That is, ideally, one UST should be worth one US dollar. Users may quickly spend, save, trade, or swap UST via the Terra blockchain.
Terra devised a "mint and burn" strategy incorporating UST and its volatile native asset LUNA to achieve price stability. The algorithm can be summarized as follows:
When the price of UST is $1, users and arbitrageurs can submit (burn) one UST to the system and get (mint) one LUNA.
When the price of UST exceeds $1, users and arbitrageurs may transmit (burn) $1 in LUNA to the system and get (mint) 1 UST.
In theory, as UST falls below $1, holders will burn their UST to mint $1 of LUNA in order to profit. As a result of the decrease in UST market circulation, the UST price will rise, and when the UST price goes above $1, holders will burn their LUNA to manufacture UST.
In other words, price stability should be maintained through arbitrage trading activities that manage UST and LUNA supply and demand.
UST/LUNA Collapse
As the public believed, a substantial amount of UST was poured into the market in May 2022, causing a rapid decline in the UST price, resulting in the stablecoin's depeg. This generated more fear among investors, who began to sell more UST and manufacture more LUNA, resulting in a significant increase in LUNA supply in the market circulation. The death spiral caused LUNA to plummet, and nearly 100% of the LUNA market value vanished within a week. Following a community vote, the Terra team announced a hard fork to the Terra blockchain in order to save the Terra ecosystem and restore investor confidence.
Rebranding and Hard Fork
As a result, the Terra blockchain was renamed Terra Classic. All balances on the old blockchain have been preserved, and Luna has been renamed Luna Classic (LUNC), while Terra stablecoins have been renamed TerraClassic stablecoins. TerraUSD (UST) was called TerraClassicUSD among them (USTC).
Classical Terra Ecosystem
Terra Classic now supports a number of protocols. Wallets like Terra Station's official project wallet and Leap Wallet support asset and token transfers, transactions, smart contract interactions, and so on. Terra Bridge allows for the cross-chain transfer of all tokens supported by Shuttle, including Terra native tokens, the majority of mAssets, and other token kinds from the Terra ecosystem. Terra Classic also supports DEX like Terraswap and Astroport, as well as the NFT project Galactic Punks.