The Truth Behind the Nearly 400% Surge in USTC in Two Days
[TL；DR]:
The tokens USTC, LUNA, and LUNC in the Terra bankruptcy sector have risen sharply in the past two days, especially the USTC, which has surged by over 400% in the past two days.
The market interpretation of the surge in USTC is due to plans such as Mint Cash airdrop empowerment and the restoration of USTC’s US dollar pegging.
The significant increase in USTC prices represents a positive view in the market, but caution is still needed for investments that have not entered in a timely manner.
Introduction
In addition to a significant increase in FTT recently, bankrupt sectors such as USTC, LUNA, and LUNC have all experienced an astonishing surge overnight. The popularity of algorithmic stablecoin USTC has strongly returned, and the market is speculating that it is related to proposals such as the Mint Cash airdrop empowerment and restoration of USTC US dollar pegging developed by former Terra members.
What are the new highlights behind the hustle and bustle, and whether there is still room for arbitrage in USTC and others? This article will provide you with a detailed explanation.
The Strong Market Trend of USTC, Which Surged Over 400% in Two Days
Starting from 23:00 on November 26th, the original Terra Eco stablecoin USTC (Terra Classic UST) suddenly took off in a straight line, reaching 0.05 USDT within an hour from 0.02 USDT, an increase of up to 250%.
As of the time of writing, the highest coin price has reached 0.075 USDT, and it is currently adjusting around 0.041 USDT. The short-term surge has reached a new high in a year.
Source: Gate.io
Meanwhile, according to the Gate.io market, LUNC and LUNA, both belonging to the Terra bankruptcy sector, have also been driven to rebound, with a surge in trading volume, and the coin price has risen by more than 60% and 40% in the past two days, respectively.
Source: Gate.io
Many new readers may not be familiar with the Terra project yet, so let’s make a brief supplement here.
After the collapse of the Terra eco in May last year, the team rebuilt the new public chain Terra 2.0, with the token still using its original name LUNA. The original Terra network was renamed Terra Classic, and its governance token LUNA was renamed LUNA Classic (i.e. LUNC mentioned earlier). The corresponding algorithm stablecoin UST was renamed Terra Classic UST (i.e. USTC mentioned earlier) according to the same rules.
Mint Cash Team Calls for Orders to Stir Up USTC
Perhaps inspired by the popular gameplay of cryptocurrency exchange Backpack bound SOL airdrops launched by former FTX utives, the Mint Cash project of Terra’s eco new stablecoin has continued to spread news of being airdropped by USTC holders in recent times, and has finally ignited market enthusiasm in the near future.
According to the white paper, Mint Cash is a stablecoin project developed by the original Anchor team based on the Terra Classic original code repository, fully supported by Bitcoin as collateral, aimed at achieving a completely decentralized payment and savings mission.
It should be noted that currently, Mint Cash’s official website only has white papers and social media accounts, and there are no actual or even test versions of products available.
Source: mintca.sh
That is to say, Mint Cash achieved the pulling effect by shouting orders without strong KOL endorsement.
According to team members, Mint Cash will perform a cold start in two ways, including:
(1) Users who hold $UST or $LUNA before May 10, 2022;
(2) Lock and destroy a specified quantity of $USTC through Mint Cash’s airdrop.
The project leader Shin Hyojin clearly stated in the tweet that participants need to lock USTC on the Terra Classic chain to participate in airdrops, and the exchange rate is 1 USTC for 1 US dollar. As more users participate in airdrops, the project team will destroy all collected USTCs to reduce market circulation. In addition, Shin Hyojin also stated that even USTC holders who have not participated in the airdrop will benefit from the plan.
Therefore, if this plan is truly implemented, then USTC holders can clearly gain huge profits, because as of the 26th of this month, the USTC price was only 0.02 USDT, indicating nearly 50 times more room for arbitrage growth.
Source: X@shinhyojin1031
In addition to Mint Cash’s official announcement of the expected airdrop, many community proposals for revitalizing USTC and LUNC have also been interpreted as an optimistic background for market FOMO.
Recently, the 11885 proposal for deploying Terrad client v2.3.1 on the chain has been approved by the community. It is worth noting that this update fixes key issues related to the dynamic ante decorator and account sequence. The vote is still ongoing, but the proposal was passed in just one day.
On November 21st, Terra Classic community administrator Dfunk proposed on a forum to reactivate the Terra Marketplace module and gradually adjust the USTC to be pegged to $1, including setting the price difference fee to 98% (gradually decreasing) to effectively stabilize the USTC price at $2 or even increase it to 3 or 4 cents, burning 100% of the price difference fee instead of sending it to the Oracle pool, etc. However, the proposal has not yet entered the voting stage due to almost 100% replication of LUNA.
Moving forward, in September of this year, Terra Classic community proposal 11324 “Reanchoring LUNC and UST” was approved. Shortly thereafter, the Terra Classic community voted again to stop all minting of Terra Classic USD (USTC) and was approved with 59% support. The proposal aims to protect communities and external investors who are currently destroying USTC to help restore anchoring.
Is USTC a New Bottle of Old Wine, or is it the Return of the King?
Simply put, the Mint Cash project is going to issue a new chain that almost overlaps and bundles various buff nesting dolls, including Celestia (modular blockchain focused on data availability layer), new Anchor (formerly Luna’s UST savings interest protocol), and Nomic DAO (nBTC protocol, bringing BTC into the Cosmos eco), among others.
For users who have experienced the previous wave of Terra takeoff, they are very familiar with this nesting pattern, especially in bull markets where they can get very rich returns.
To some extent, the rise in USTC prices has had a positive impact on the market. Firstly, this indicates people’s confidence in the Terra eco. Secondly, this also enhances the status of USTC as a stablecoin.
Mint Cash has indeed made a beneficial attempt to promote USTC’s expansion of usage scenarios towards destruction and deflation. If Mint Cash’s operation can truly be implemented, it will undoubtedly give birth to a new forward spiral nesting project.
On the other hand, early projects in the PPT state also face potential risks. At least based on the information currently disclosed, there is not much correlation between USTC and the subsequent scenarios and use cases of CASH and the new Anchor. However, the Mint Cash project team clearly does not have the financial reserves and noble sentiments to exchange for the massive USTC, so there is still a lot of work to be done behind the grand plan.
Source: X@cmdefi
If we predict from the perspective of capital game, when the price of USTC is too high, it will lead to an increase in arbitrage trading, thereby causing a price drop. In addition, if there is a general panic in the market, the USTC price may also experience a significant decline.
The latest news we received at the conclusion of this article is that Shin Hyojin has stated that the airdrop will include multiple tokens, and the specific details are being finalized. Mint Cash will seek investment from VC. This inconsistent statement has really dampened market enthusiasm, and the coin price has been lowered. Further observation is needed in the future.
In summary, the significant increase in USTC prices is a result of the positive response of the main market to Mint Cash airdrop expectations and new community proposals. However, the market is still full of uncertainty, and for investors who did not enter early, caution should still be maintained.
