TerraClassicUSD (USTC), formerly known as TerraUSD (UST), is a decentralized algorithmic stablecoin native to the Terra Classic blockchain. It was originally designed to provide scalable cross-chain decentralized finance (DeFi) solutions. As an algorithmic stablecoin, USTC operates differently from centralized alternatives like USDT or USDC, aiming to foster a fully decentralized financial ecosystem.
USTC maintains its peg through a unique mint-and-burn mechanism involving its sister token, Luna Classic (LUNC). Users can always mint new USTC by burning LUNC tokens worth $1, or redeem USTC for $1 worth of LUNC, regardless of the current market price. This creates arbitrage opportunities that help stabilize USTC’s value around its intended $1 peg.
The Terra ecosystem also featured other algorithmic stablecoins pegged to various fiat currencies, such as TerraKRW (KRT) for the South Korean won. These allowed nearly fee-less exchanges between different Terra stablecoins, simplifying international currency conversions.
Understanding USTC’s Price and Economic Model
Unlike stablecoins with fixed supplies, USTC has no maximum supply cap. New USTC tokens enter circulation whenever LUNC tokens are burned. This flexible model supports the stablecoin’s algorithmic stabilization mechanism.
Following the depegging event in May 2022, UST was rebranded as USTC and remains exclusively on the original Terra Classic chain. Meanwhile, the original LUNA token was renamed LUNA Classic (LUNC), and a new token—LUNA—was launched on the Terra 2.0 blockchain. Most DeFi applications migrated to Terra 2.0, but USTC remains on the classic chain with no planned upgrades or migration.
The Team Behind TerraClassicUSD
Terraform Labs, the company behind USTC, was co-founded in 2018 by Daniel Shin and Do Kwon. The project was incubated by the Terra Alliance, a group of e-commerce companies based in South Korea. TerraUSD, the precursor to USTC, was officially launched in September 2020.
Daniel Shin, a Wharton School graduate, had previously founded TMON—a major Korean e-commerce platform—as well as the startup incubator Fast Track Asia and the popular payment application Chai.
Do Kwon, a Stanford University alum, worked on Microsoft’s natural language processing team before co-founding Terra. In 2019, he was named to the Forbes 30 Under 30 list in the finance category.
Terraform Labs secured $58 million in funding as of January 2021, followed by an additional $150 million in a July 2021 funding round. Major investors included Pantera Capital, Galaxy Digital, and Coinbase Ventures.
How USTC Works: Algorithmic Stabilization Explained
USTC relies on a dual-token model where its stability is algorithmically enforced through arbitrage. When USTC trades above $1, users are incentivized to burn LUNC to mint new USTC, increasing its supply and pushing the price down. Conversely, if USTC falls below $1, users can burn USTC to mint LUNC, reducing supply and raising the price.
This model was designed to be fully decentralized, avoiding the need for collateral reserves typical in fiat-backed stablecoins. However, the mechanism proved vulnerable under extreme market conditions, leading to the historic depegging event.
USTC Price History and Market Performance
Since depegging, USTC has traded significantly below its intended $1 value. Its price is influenced by market sentiment, trading volume, and ongoing developments within the Terra Classic community. Unlike before, it no longer benefits from the same algorithmic stabilization, making its price more volatile and speculative.
Investors and traders monitor USTC price charts for short-term fluctuations and long-term trends, although it no longer functions as a typical stablecoin.
USTC Use Cases and Ecosystem
Although USTC lost its peg, it remains a traded asset and is supported by certain wallets, exchanges, and DeFi protocols within the Terra Classic network. Some community initiatives aim to restore utility, though these efforts remain experimental.
👉 Track USTC real-time price data
USTC vs. Other Stablecoins
Unlike centralized stablecoins such as USDT and USDC, which are backed by reserves and managed by companies, USTC is algorithmic and was designed to be decentralized. Other decentralized stablecoins like DAI use over-collateralization, whereas USTC relied purely on code and arbitrage—a higher-risk model.
Frequently Asked Questions
What is TerraClassicUSD (USTC)?
USTC is an algorithmic stablecoin originally designed to maintain a 1:1 peg with the US dollar. It operates on the Terra Classic blockchain and uses a mint-and-burn mechanism with LUNC to stabilize its price.
Why did USTC lose its dollar peg?
USTC depegged in May 2022 due to a loss of confidence, massive selling pressure, and vulnerabilities in its algorithmic design. This led to a death spiral where burning USTC increased LUNC supply, further depressing both tokens' prices.
Can USTC regain its peg?
While community proposals and burning mechanisms have been suggested to restore the peg, there is no guaranteed path. USTC currently operates more as a volatile digital asset than a stablecoin.
Is USTC the same as UST?
UST was rebranded to USTC after the depeg event. It remains on the original Terra Classic chain and is not supported on Terra 2.0.
Where can I track the live price of USTC?
You can monitor USTC’s real-time price, market cap, and trading volume on major cryptocurrency data platforms and exchanges.
What is the difference between LUNA and LUNC?
LUNC is the original Luna token on the Terra Classic chain, while LUNA is the new native token of Terra 2.0. Both are distinct assets with separate networks and use cases.