Unlike most other major stablecoins which are backed by other assets, TerraUSD's value was derived by complex algorithmic processes, linked to another paired token called Luna. Both tokens have lost nearly all of their value since TerraUSD, known as UST, slipped below its 1:1 peg to the dollar earlier this month.
Under Do Kwon’s newly approved structure, the original blockchain will be known as Terra Classic, while its native token Luna, which plunged close to zero this month, will be renamed Luna Classic with the ticker LUNC.
The new Terra blockchain will start running a coin under the existing Luna name and ticker, and won’t include the TerraUSD stablecoin. “Terra 2.0 is coming. With overwhelming support, the Terra ecosystem has voted to pass Proposal 1623, calling for the genesis of a new blockchain and the preservation of our community," the tweet stated.
Terra backers will distribute the new Luna token to Luna Classic and UST holders. In a tweet, Terra said that it would work with crypto exchanges Binance and Bybit to distribute the new asset to people who held Luna Classic and UST on exchanges.
The process means Terraform Labs is effectively abandoning the stablecoin TerraUSD, or UST, which from now on will only trade on the Terra Classic blockchain. Designed to maintain a 1-to-1 peg to the dollar, it traded at around 10 cents on Wednesday.
TerraUSD, one of the world's largest stablecoins, lost a third of its value earlier this month, spooking cryptocurrency investors and partly contributing to bitcoin's tumble.
