Back in August 2023, the that would see 800 million USTC incinerated. This move came about as the community worked to help the token recover and be re-pegged back to the US dollar. Naturally, the proposal passed and the community prepared for the massive burn. That is until the plan hit a snag.
As a result of this, validators have begun to vote no to carrying out the burn, citing these legal issues. This is derailing the which is expected to reduce the token supply by around 8% in a single go.
The two proposals are currently going head to head. As always, token holders are able to vote on the proposal they want to support. Once voting ends, whatever proposal passes will determine what happens to the in the community wallet.
Terra Classic Validators Worried About Code Changes
The 800 million USTC mentioned in the proposal to be burned are the tokens held in the community treasury and managed by Risk Harbor. After the proposal was passed, the community turned toward carrying out the burn, until validators raised an issue with the plan.
According to Risk Harbor, they no longer had the keys to the wallet which happens to be a multi-sig wallet. So by default, these USTC coins are no longer accessible. But to burn the token, validators would be required to update the codes on their nodes and the legalities around this move have been questioned.
In response to this, a Terra Classic validator known as Lunanauts has proposed what they say is a “legally absolved route” to completing the burn. Basically, Lunanauts has devised a way in which validators would not have to update the codes on their nodes and thus, avoid any legal issues.
Token price still trading well below dollar peg | Source:
Legal Way To Burn 800 Million USTC
In a made on the Terra Classic community forum titled “Burn of 800m USTC Funds – legally absolved route,” Lunanauts suggests using a smart contract to actually burn the tokens. The objective of the proposal, Lunanauts explained, is to still carry out the burn but eliminate legal repercussions for validators. The process would involve creating a smart contract carrying a “sole MsgSend to transfer all holdings to Anxu.” Once this is done, the multis contract can then be transferred via governance to the code id create. So there is no need for any code changes by validators. As Lunanauts explains, “The proposed method achieves the same effect as (proposal 11913) without requiring validator installations.” Lunanauts’s ‘solution’ comes hot on the heels of Proposal 11832 which has taken another route to address validators’ legal concerns. The proposal wants to blacklist the holding the 800 million USTC instead, making it impossible to transfer tokens from that wallet.
Nevertheless, all of this is being done with the endgame of . The token is still trading about 96% below its peg with a 9.78 billion total supply.
for market insights, updates, and the occasional funny tweet… Featured image from Coinmarketcap, chart from TradingView.com
