What is USTC?
TerraClassicUSD (USTC) is an algorithmic stablecoin that operates on the Terra Classic blockchain. It emerged after the collapse of TerraUSD (UST) in May 2022 and the loss of its peg to the dollar. The original UST was renamed USTC and moved to Terra Classic after the 'de-pegging' and restructuring of the Terra ecosystem.
The initial mechanism for supporting the USTC rate was algorithmic: LUNC (LUNA Classic) tokens were burned in exchange for USTC and vice versa, to stabilize the price. But after the collapse, this system became non-functional — currently USTC is not pegged to $1 and fluctuates like an ordinary cryptocurrency.
Current market statistics
Price: approximately $0.0135 (prices vary between $0.0129 and $0.0142 depending on the exchange)
Market capitalization: about $75–79 million with approximately 5.6 billion coins in circulation
24-hour trading volume: $35–45 million
How does it work?
The idea of USTC once involved automatic balancing of the exchange rate through the burning/emission of LUNC. When USTC was worth above $1 — LUNC was burned and supply growth was awaited; when below — USTC was burned to reduce its supply. But after the collapse of this system, the algorithm no longer stabilizes the rate, and USTC has effectively lost its stability.
The Terra Classic community has recently supported the burning of LUNC and limiting the emission of USTC to reduce circulation and potentially restore the rate. But whether positional stability can be returned is a contentious issue.
Usage and applications
Trading and exchange: USTC is actively used as an asset for trading on the spot market (for example, the USTC/USDT pair) on Binance, KuCoin, MEXC, and other exchanges.
Participation in DeFi: the token is used in liquidity pools, particularly for earning income from liquidity services.
Payment and transfer mechanisms: sometimes USTC is used for online payments or transfers, although the instability of its value reduces its effectiveness as a stable currency.
⚠️ Risks and warnings
1. Lack of stability: USTC has long ceased to maintain a peg to the USD, so its movement rate does not differ from ordinary crypto assets.
2. High volatility: the price can change sharply due to low capitalization and market sensitivity.
3. Uncertain regulation: since USTC is not stable and unpegged, its legal and tax status is unclear in many jurisdictions.
4. Dependence on the Terra Classic community: the policy of burning, restoring, or emitting USTC is decided by voting, not centralized.
Summary
Characteristic/ Value
Name/ TerraClassicUSD (USTC)
Type/ Algorithmic stablecoin, now — unregulated cryptocurrency asset
Blockchain/ Terra Classic (LUNC)
Rate support/ Previously algorithmic, now non-functional
Current price (USD)/ ≈ $0.0135
Capitalization/ ≈ $75–79 million
Circulating supply/ ≈ 5.6 billion coins
Usage/ Trading, DeFi liquidity, transactions
Main risks/ High volatility, lack of stability, dependence on the community
Academic psychological perspective
As a psychologist with an analytical disposition and high academic demands, it is important to assess the cognitive and emotional factors when clients interact with USTC:
People may mistakenly perceive USTC as a traditional stablecoin (i.e., at $1), although in fact, its exchange rate is floating.
High risk of psychological stress due to rapid price fluctuations.
It is important to explain to clients that $USTC
— this is not a stable currency, but a highly volatile asset with low liquidity.
One should be cautious with clients who invest funds expecting a 1:1 peg to the dollar — it is not the case.