USTC Reclassification Proposal 12163: The Community’s Decision to Abstain

The Terra Classic (LUNC) ecosystem has been at the centre of ongoing governance discussions, with Proposal 12163 seeking to reclassify USTC and potentially restore its standing as a stablecoin. However, the community’s decision to abstain from voting reflects a broader sentiment that Binance and other key players have already conducted their due diligence and acted accordingly.

Given USTC’s turbulent history and its failure to maintain price stability, many believe that any reconsideration should be based on demonstrated performance rather than speculation.

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Understanding Proposal 12163: What Was at Stake?

Proposal 12163 aimed to reclassify USTC within the Terra Classic ecosystem, potentially allowing it to regain stablecoin status. This reclassification could have influenced its market perception, liquidity, and integration with exchanges and DeFi protocols.

However, key factors led to the decision to abstain from voting:

• Binance has already assessed USTC’s status and acted based on its track record.
• USTC has not consistently performed as a stablecoin since its depegging in 2022.
• Market-driven stability should determine reclassification, rather than governance votes alone.

Why the Community Abstained

The abstention from voting signals caution and pragmatism within the Terra Classic governance framework. Key considerations include:

1. Binance’s Research & Actions
   1. Binance has already evaluated USTC independently and made decisions regarding its classification and listing.
   1. The exchange’s influence on liquidity and market stability suggests that external validation is essential before considering reclassification.
2. Performance-Driven Reclassification
   1. USTC’s reclassification should be tied to its ability to maintain price stability over time.
   1. If USTC proves itself as a stablecoin again, the classification can be reviewed based on real-world data rather than sentiment.
3. Avoiding Premature Governance Decisions
   1. Reclassifying USTC without evidence of stability could create false expectations in the market.
   1. It is more strategic to monitor its price behaviour and adoption trends before taking governance action.

Future Outlook for USTC

While Proposal 12163 did not result in an immediate reclassification, it highlights the continued interest in restoring USTC’s utility. If USTC successfully regains and maintains its peg, governance proposals may revisit its stablecoin status in the future.

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For now, the decision to abstain demonstrates a mature and responsible approach to governance, ensuring that classification changes are driven by market realities rather than speculation.

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