TerraClassicUSD

What is TerraClassicUSD (USTC)?

Introducing TerraUSD (UST) TerraUSD (UST) is a decentralized, algorithmic stablecoin on the Terra blockchain, designed for scalability and compatibility with DeFi applications. Pegged to the US Dollar, TerraUSD offers a high degree of scalability, precise interest rates, and seamless interchain operability. As a result, it has gained significant traction as a leading stablecoin since its launch in September 2020.

UST is known for its ability to maintain its scalability while meeting the demands of DeFi protocols. It can be easily integrated into crypto wallets, and it is also utilized in DApps for minting synthetic assets tied to real-world asset prices. UST is often used alongside Terra's native cryptocurrency, LUNA.

If you'd love to add this project to your portfolio, you can get the latest UST coin price at Binance, OKX, BTCEX, Bitrue, and Bybit.

Reason Behind UST's Depeg

On May 9, 2022, UST experienced a significant devaluation, falling from its $1 peg to a low of $0.68. As of now, it remains uncertain whether UST will regain its peg. UST's depreciation began when it started trading marginally below its dollar peg, which led to the gradual depletion of the Curve pool containing UST.

Users exchanged their UST for alternative stablecoins. Concurrently, the short selling of LUNA, which serves as collateral for UST, pushed its price downward. This negative price pressure compelled Terra to mint more LUNA in an effort to halt UST's descending spiral. However, this action diluted LUNA's price without restoring UST's peg.

Even after Terra's treasury sold $1.5 billion worth of BTC, confidence in UST was not restored. This situation resembled a bank run, with UST holders preferring to accept a lower return on their UST rather than redeeming it for LUNA.

TerraUSD Founders

TerraUSD was launched by Do Kwon and Daniel Shin, the founders of Terra (LUNA). Kwon, the CEO of Terraform Labs, has worked as a software engineer at Microsoft and Apple, and he also co-founded Anyfi, a startup focused on decentralized solutions for wireless mesh networks. Meanwhile, Shin is an accomplished economist and entrepreneur who co-founded Fast Track Asia, a startup incubator and led the South Korean e-commerce platform TMON.

Securing the TerraUSD Network

The TerraUSD network is secured through its peg to the US Dollar and its connection to Terra (LUNA), which acts as an asset reserve. This reserve ensures stability and security for UST via the seigniorage process. Miners play an essential role in maintaining the network's security by participating in a proof-of-stake (PoS) consensus mechanism. This helps stabilize the network by absorbing short-term demand volatility for Terra. The TerraUSD protocol aims to provide stable rewards to miners in all economic conditions, thus compensating those who protect and develop the network.

TerraUSD (UST) Pros and Cons

Pros:

• Scalable and compatible with DeFi applications.
• Seamless integration with crypto wallets.
• Utilized in DApps for minting synthetic assets.
• Supported by a strong and experienced team of founders.

Cons:

• Potentially impacted by regulatory changes targeting stablecoins.
• Reputation is irreversibly tarnished by the Depeg fiasco.
• A hidden owner is detected on one of its contracts.
• One of its contracts is not open source.
• Mint function detected on multiple contracts.
• One of its contracts can pause the trading of its tokens.

TerraUSD (UST) Review

TerraUSD has rapidly emerged as a top contender in the stablecoin market since its launch. Its scalability, compatibility with DeFi applications, and seamless integration with wallets and DApps have made it a popular choice among users.

That was then, however. Now Luna has its reputation irreversibly damaged by the whole scandal involving its depeg on the US Dollar.

Our security review also reveals more details on the project. We've discovered a critical risk that involves one of the contracts not being open source.

A hidden owner on the project is also detected which can be a potential risk to investors. This means the hidden owner can potentially change the contract's code and possibly make malicious changes to the contract even after relinquishing control.

Our analysis also uncovered a mint function on multiple contracts and a pause function on one of its contracts. This is potentially risky since the owners of the contract can mint and pause tokens at will.

Is TerraUSD (UST) a Scam?

After all the details surrounding this project, there seems to be not enough evidence to suggest that TerraUSD (UST) was a scam. With the arrest of its defamed ex-CEO Do Kwon, there should be more pieces to be put together and shed light on with his upcoming investigation.

For now, this project is still being actively developed by an experienced team, offering a scalable solution for DeFi applications.

This should be a case study in making sure you are verifying information you see on the web and doing your due diligence before committing to a project.

Any investment can lead to losses. This is why it's essential to DYOR and be aware of potential risks.

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