There is an idea that a cryptocurrency with an elastic monetary policy would maintain a stable price while retaining all the censorship resistance of Bitcoin, making it viable for use in everyday transactions. However, price stability is not sufficient for the wide adoption of a currency.
Currencies inherently have strong network effects: a customer is unlikely to switch over to a new currency unless a critical mass of merchants is ready to accept it, but at the same time, merchants have no reason to invest resources and educate staff to accept a new currency unless there is significant customer demand for it. For this reason, Bitcoin’s adoption in the payments space has been limited to small businesses whose owners are personally invested in cryptocurrencies.
Terra believes that while an elastic monetary policy is a solution to the stability problem, an efficient fiscal policy can drive adoption. In addition, their protocol will offer strong incentives for users to join the network with an efficient fiscal spending regime, managed by the Treasury, where multiple stimulus programs compete for financing.
TerraClassicUSD is a price-stable and growth-driven token that achieves price stability via an elastic money supply, enabled by stable mining incentives. It uses the seigniorage created by its minting operations as transaction stimulus, thereby facilitating adoption.
They intend to use proposals from community participants that will be vetted by the rest of the ecosystem, and when approved, they will be financed to increase adoption and expand the potential use cases. Thus, the Terra Protocol, with its balance between fostering stability and adoption, will represent a meaningful complement to fiat currencies as a means of payment and store of value.
Like any other market, the Terra money market follows the simple rules of supply and demand for a pegged currency. Which is:
- Contracting money supply, all conditions held equal, will result in higher relative currency price levels. That is when price levels are falling below the target, reducing the money supply sufficiently will return price levels to normalcy.
- Expanding the money supply, with all conditions held equal, will result in lower relative currency price levels. That is when price levels are rising above the target, increasing the money supply sufficiently will return price levels to normalcy.
Of course, contracting the supply of money isn’t free; like any other asset, money needs to be bought from the market. Central banks and governments shoulder contractionary costs for pegged fiat systems through a variety of mechanisms including intervention, the issuance of bonds and short-term instruments thus incurring interest expenses, and hiking of money market rates and reserve ratio requirements thus losing revenue.
Since Terra is a stable digital currency that is designed to complement both existing fiat and cryptocurrencies as a way to transact and store value, the protocol adjusts the supply of Terra in response to changes in demand to keep its price stable.
This is achieved using Luna, the Terra also achieves efficient adoption by returning seigniorage not invested in stability back to its users. Its transparent and democratic distribution mechanism gives dApps the power to attract and retain users by tapping into Terra’s economic growth.
Built on the Terra blockchain, TerraClassicUSD (USTC) is a stablecoin. Technical support is absent for the USTC coin and burning LUNA tokens promote the establishment of the USTC instead. Because of changes in the asset’s supply and demand as well as the value of the US dollar, the USTC value varies.
Holders of LUNA may exchange their tokens for UST when the value of the USTC is greater than $1. Additionally, as a result of the expansion of the UST supply, LUNA prices are rising as well. UST tokens may be exchanged for Terra when supplies are cut to increase profits (LUNA). With this move, the UST price is brought back to the desired level. As a result, a certain quantity of LUNA is burned, which raises their value by making them scarce.
Who are the founders of TerraClassicUSD (USTC)?
In April 2019, Do Kwon and Daniel Shin established Terra (LUNA). They introduced TerraUSD on Bittrex Global in September 2020. Since then, TerraUSD has outperformed several stablecoin rivals on the market, including GUSD (Gemini) and PAX (Paxos). Terra is the proprietary blockchain for TerraUSD, developed by Terraform Labs (a subsidiary of Terra Alliance).
The CEO of Terraform Labs is Do Kwon. He was a former software engineer for Apple and Microsoft. He was also the CEO of Anyfi, a young company that offered decentralized solutions for wireless mesh networks. He has a Co-founder, Daniel Shin, who is an accomplished businessman and economist. Before Terra Alliance, he managed to co-found and headed TMON (Ticket Monster), a South Korean e-commerce platform, as well as Fast Track Asia, a business incubator.
What is TerraClassicUSD (USTC) used for?
USDTC is primarily used to facilitate trades on cryptocurrency exchanges. Instead of directly purchasing bitcoin using fiat money, such as the US dollar, traders frequently convert fiat into USDTC and then carry out a transaction with the USDTC for another cryptocurrency, such as bitcoin or ether.
Lending and staking
Although more experienced cryptocurrency traders might use USDTC for staking, lending, and other things, most newcomers utilize it to reduce trading costs.
Remittances, or sending money across borders, is another use for the USDTC. It can be transferred freely between people in different nations without being subject to the high costs charged by third parties for international money transactions.
How is TerraClassicUSD (USTC) unique?
Terra aims to be a family of cryptocurrencies that are each pegged to the world’s major currencies. Close to genesis, the protocol will issue Terra currencies pegged to USD, EUR, CNY, JPY, GBP, KRW, and the IMF SDR. Over time, more currencies will be added to the list by user vote.
TerraSDR will be the flagship currency of this family, given that it exhibits the lowest volatility against any one fiat currency. It will be the currency in which transaction fees, miner rewards, and stimulus grants will be denominated. As Terra’s ecosystem adds more currencies, its atomic swap functionality can be an instant solution to cross-border transactions and international trade settlements.
In addition, the system supports atomic swaps among Terra currencies at their market exchange rates. A user can swap TerraKRW for TerraUSD instantly at the effective KRW/USD exchange rate. This allows all Terra currencies to share liquidity and macroeconomic fluctuations; a fall in demand for one currency can be quickly absorbed by the others.
The potential applications of Terra are immense, as Terra is used as a medium of exchange in online payments, allowing people to transact freely at a fraction of the fees charged by other payment methods. As the world starts to become more and more decentralized, Terra will be used as a dApp platform where price-stable token economies are built. Terra is also looking to become the first usable currency and stable platform on the blockchain, unlocking the power of decentralization for mainstream users, merchants, and developers.
How many TerraClassicUSD (USTC) coins are in circulation?
With a maximum supply of 1.93 billion USTC as of June 2021, TerraClassicUSD (USTC) stands out among stablecoins in the cryptocurrency industry for its scalability and utility.
How is the TerraClassicUSD (USTC) network secured?
TerraClassicUSD is backed by Terra and pegged to the value of one dollar (LUNA). Through the seigniorage process, LUNA, an asset reserve, assures the stability and security of the UST (income received from the emission of money).
The security of Terra is also significantly influenced by miners. Through their participation in a proof-of-stake (PoS) consensus, miners help Terra maintain stability by absorbing transient demand volatility. After all, one of the key prerequisites for safety and stability is a steady demand for mining. The TerraUSD protocol, therefore, aims to offer reliable rewards in all economic circumstances. In this manner, TerraUSD can pay individuals who uphold and develop the network.
How do I buy TerraClassicUSD (USTC)?
The USDTC token can be used for a wide range of purposes, like staking and payments.
USDTC tokens can be easily purchased by following the following steps.
Open an account with the crypto trading platform.
* Transfer the specific amount of your fiat currency to your account.
* Wait for your deposit to be confirmed and buy USDTC through your trading account.
Which Cryptocurrency Wallet Supports TerraClassicUSD (USTC)?
The PTPWallet platform supports many cryptocurrencies, with TerraClassicUSD soon to be included. Because of its vast use case, PTPWallet has grown to become one of the most used platforms, as it serves as an exchange and an engine to discover other cryptocurrencies. The platform offers a simple user interface, is supported by both Android and iOS devices, and comes with its own mobile wallet app.