The Terra Classic community is discussing a proposal to improve how people swap between LUNC and USTC. Many users think this is about bringing USTC back to $1, but it’s not a re-peg plan and does not treat USTC as a stablecoin.
Here’s an easy explanation of what’s changing and why it matters.
What Will Change
1. No More Minting Tokens
In the past, the Market Module could “mint” new tokens during swaps. This won’t happen anymore. Instead, a swap pool will be used, filled with 60% of the burn tax collected from the previous period. This makes sure swaps only use existing tokens.
2. Real Price Swaps
The system will now use real market prices from the oracle instead of always saying USTC = $1. This means if USTC is worth 200 LUNC, you’ll get exactly that amount in swaps.
3. Swap Fees Help Burns
Every swap has a 0.35% fee. Half of it will be burned, and the other half will support the Oracle Pool, which helps the chain.
4. Unused Tokens Get Burned
If tokens stay unused in the swap pool, they’ll be burned automatically at the start of the next period. So, nothing is wasted.
How It Works (Example)
● Imagine 667M LUNC is collected from burn taxes.
● 60% (400M LUNC) goes into the swap pool.
● If someone swaps 2M USTC for LUNC, all 400M LUNC from the pool could be used up.
● Later, if people swap LUNC for USTC, the pool refills with LUNC, allowing more swaps again.
Why This Helps
● Safe and Controlled: No minting means no risk of hyperinflation.
● Fair Pricing: Swaps use actual market prices, not fixed numbers.
● Burns Still Happen: Even if swaps redirect some tokens to the pool, unused tokens are burned later.
● Arbitrage Opportunity: Since on-chain prices update every 30 seconds, traders might find price differences between exchanges and the module, leading to more activity.
Common Questions
● Will this create more LUNC and cause inflation?
No. Only existing tokens are used.
● Is this trying to make USTC $1 again?
No. USTC will stay a market-based token, not a stablecoin.
● What about Binance burns?
Binance stopped burning before because of minting. Since minting is removed here, Binance burns should continue normally.
● What trading volume can we expect?
Hard to know exactly, but past data shows around $30K–$40K per month could happen.
● Is it risky?
Technical risks will be carefully tested and reviewed. The main risk is that people might expect too much from this change.
● Can we go back to the old system later?
Yes. The update is designed so it can be reversed if needed.
Development Plan
Developer StrathCole will build this voluntarily if the community supports it through a governance vote. The coding might take 2–3 weeks, followed by detailed testing and optional security audits.
Summary
This proposal introduces a safe, limited-supply swap system for LUNC and USTC. It avoids creating new tokens, uses real market prices, and continues to burn unused tokens. The goal is to make swaps more reliable while still reducing supply over time.