The community-driven chain restoration efforts took a whole nother level when Ceramics dApp developers introduced a plan to re-peg the malfunctioning USTC stablecoin. According to one of the devs, the plan will start with a 100-day conversion window from Terra Classic USD (USTC) to USTR, the new stablecoin by Ceramics team that’s designed to help with USTC’s $1 re-peg.
LUNC Community Readies For USTC Re-Peg Campaign
Namely, the centerpiece of this USTC rescue plan is the Collateral Market Maker (CMM), designed to assist in the deflationary mechanism. Besides, the collateral levels of the CMM directly correlate with UST1’s minting, a substitute token that Terra Luna Classic’s (LUNC) ecosystem users get to swap, stake or trade once the USTR-to-UST1 swaps are initiated.
According to the developer’s explanation, Ceramics team will launch a decentralized application (dApp) where Web3 users can swap their USTC for USTR, which can later be changed for UST1 if applicable. The white paper states 120% in collateral ratio is needed for USTC’s re-peg.
How Collaterized Market Maker (CMM) Solves The Issue
For this mechanism to work out in USTC’s highly-anticipated $1 re-peg, the 100-day conversion window starts at a 1:1 rate, increasing by 1% a day to 2 USTC versus 1 USTR. The referral incentives to migrate on-chain liquidity are combined with a play on SushiSwap’s vampire attack, enticing a competitor’s users from a similar platform.
Most importantly, the Collaterized Market Maker (CMM) integrates a 50% – 50% monetary policy. This enables 50% of the emissions to cover the staking rewards for USTR & UST1 holders, while the other 50% is burned in USTR & DISP tokens, solidify the revamped USTC stablecoin’s cross-chain liquidity once the $1 peg is restored.
On The Flipside
- Ceramics’ plan to re-peg USTC involves a lot of bot activity via the Binance Smart Chain, needed to enhance collateral generation as LUNC chain’s activity has fallen sharply over the past few years.
Why This Matters
The steering wheel has been given back to the crypto community ever since TerraForm Labs’ bankruptcy case, but LUNC chain’s waning relevancy & lack of new features make it challenging for the volunteer devs to restore a part of this L1 chain’s original glory.
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The Ceramics Repeg plan, led by Leonardo, seeks to restore USTC’s $1 peg by converting it to USTR via a Collateral Management Module (CMM) on Binance Smart Chain, though success is not guaranteed and depends on execution.
The 100-day conversion window is targeted for Q3 2025 (July-September), potentially starting soon, but past delays (e.g., from Q1) suggest caution—official confirmation is still pending.
USTC will lock into the CMM, generating collateral via bot trading, with USTR minted based on a 120% collateral ratio for swaps to UST1. However, untested mechanisms and market conditions pose significant risks.
Regulatory hurdles, insufficient collateral growth, bot dependency, or a market downturn could derail the peg, potentially leading to losses or a repeat of the 2022 depeg collapse.
The plan is speculative, with Leonardo’s disclaimer noting strategy changes in a bull market. Investors should proceed with extreme caution, as well as conduct thorough research.
