USTC no longer functions as a stablecoinUSTC is a cryptocurrency on the Terra Classic (LUNC) blockchain.
Originally designed as an algorithmic stablecoin, its value maintenance mechanism was disabled after the UST crash in May 2022. TerraClassicUSD (USTC)âs original mechanism was designed as an algorithmic stablecoin, meaning that its value was to be kept stable relative to the US dollar by an algorithm rather than by physical reserves of dollars. Hereâs how it worked:Balance of Supply and Demand:The system used an arbitrage mechanism between USTC and LUNA (the native cryptocurrency of the Terra blockchain). When the price of USTC rose above $1, users could burn (destroy) LUNA to mint (create) more USTC, thereby increasing the supply of USTC and lowering its price.
When the price of USTC fell below $1, users could burn USTC to mint LUNA, thereby reducing the supply of USTC and increasing its price.
Algorithmic Stability:
This burning and minting system was designed to keep the price of USTC near $1 by providing economic incentives for users who participated in arbitrage.
However, this mechanism failed in May 2022, leading to a significant loss of value and the deactivation of the algorithmic system.
Since then, USTC no longer functions as a stablecoin and its value can fluctuate significantly.
The future of TerraClassicUSD (USTC) is uncertain and depends on several factors, including the development of the cryptocurrency market and regulatory decisions.
Here are some predictions and considerations:
Price Predictions:
USTC price is predicted to reach around $0.01887 USD by the end of 2024. The maximum price forecast for 2024 is $0.02361 USD, which is expected to be reached in August 2024 but as you can see the price exceeded the estimate and is now at a maximum of 0.03000 USD.
Influencing Factors:
Regulation: Regulatory actions in different countries can significantly impact the value and adoption of USTC.
Technological Development: Improvements in blockchain technology and the adoption of new applications may influence the demand for USTC.Market Confidence: Investor and user confidence in the stability and utility of USTC will also play a crucial role.
Risks:Volatility:
Like many cryptocurrencies, USTC can experience high volatility, which can lead to significant fluctuations in its price.
Competence:
Competition with other stablecoins and cryptocurrencies may affect its market position.
