$USDC USTC (TerraClassicUSD) is a decentralized stablecoin that was originally designed to be pegged to the US dollar ($1.00). It is part of the Terra Classic blockchain, which was previously known as the Terra blockchain before the collapse in May 2022.

Here’s a detailed explanation:

🔹 What is USTC?

Full name: TerraClassicUSD (USTC)

Original ticker: UST (rebranded to USTC after the collapse)

Blockchain: Terra Classic

Purpose: Algorithmic stablecoin designed to maintain a 1:1 peg with the US Dollar.

🔹 How Did UST Work?

UST was not backed by fiat reserves (like USDC or USDT). Instead, it used an algorithmic mechanism involving the native token LUNA (now LUNC):

You could burn $1 worth of LUNA to mint 1 UST.

You could burn 1 UST to get $1 worth of LUNA.

This mechanism was intended to maintain the $1 peg by arbitrage.

🔻 What Went Wrong?

In May 2022, UST lost its peg due to a combination of market panic, large withdrawals, and a breakdown in the algorithm: