TerraCVita Mulls New LUNC-backed Stablecoin in Response to Binance’s CZ AMA

The development group considers the merits of CZ’s suggestion.

Independent Terra Classic development group TerraCVita recently discussed the possibility of creating a new algorithmic stablecoin for the Terra Classic chain that could, among other things, burn Terra Luna Classic (LUNC) faster.

It happened in a Twitter exchange between Rex Harrison, aka Rexzy, a senior group member, and the TerraCVita official account on Thursday. The conversation started in response to statements made by Binance Chief Executive Officer Changpeng Zhao in an ask me anything (AMA) session hosted on Twitter spaces on Wednesday.

“One issue with UST was non-transparency. When UST crashed, no one knew what Do Kwon or his team were doing about it. And Do Kwon acted too slowly to use BTC reserves to restore the peg,” said the Binance chief speaking on the problems with stablecoins and TerraUSD (UST), now known as TerraClassicUSD (USTC).

“If an algorithm to restore the peg had been coded in a smart contract in a transparent way (like DeFi/Uniswap), people would at least know the risks. That might be a better way to go, but it will need further development.”

Notably, the TerraCVita group expressed that the Terra Classic network has what it takes to either re-peg USTC or create a new algorithmic stablecoin.

If @cz_binance has the desire, we've the @_Terraport_ DEX and the #LUNCCommunity and our own self funded @TerracVita dev team.@frag_dude @Man12TC @CaronteDimonio @TonyR995
Is it time for @edk208 and the grown ups to discuss a new Reg free algo stablewhateveryouwanttocallit?

— TerraCVita (@TerracVita) February 16, 2023

Recall that CZ recently sent the price of USTC soaring with a Twitter comment where he conceded that Terra Founder Do Kwon had the right vision. It is worth noting that with the perceived hostile stance of United States regulators to crypto and, most recently, stablecoins with the potential Securities and Exchange Commission action against Paxos for its issuance of Binance USD, decentralized algorithmic stablecoins are getting more attention.

Terra founder Do Kwon, in the past, had asserted that crypto needed a robust decentralized stablecoin, touting UST to fill that gap. However, it all came crashing down as the defunct stablecoin lost its peg last May, sending shock waves through the nascent market that the industry is still reeling from today.

Finding a solution to reclaim the peg remains a core theme within the Terra Classic network. There is an increased buzz surrounding the defunct stablecoin as the community recently passed a signal proposal to re-peg it. Whether this is a feat the community can undertake remains to be seen.

At press time, 1 USTC is valued at $0.02862.