Reroute LUNC/USDC Position To Injective USDC

Proposals
1

Summary

The community owns roughly 62,193 USDC and 1.23 billion LUNC deployed as liquidity across three LUNC/USDC pools under the framework of Proposal 12171. That USDC arrived through Noble - which used to be the native Cosmos minting hub for Circle’s USDC.

Circle is switching off the transfer protocol CCTP v1 - which gives that USDC its value. On 1st December 2026, CCTP v1 will be paused. Noble runs on CCTP v1 only and will get no v2 upgrade. As it currently stands, the chain is under maintenance-only mode. After CCTP v1 has been paused, the USDC we hold as a community stops being redeemable via Ethereum. This event will cut the liquidity that the community owns off from the actual tokenized dollar collateral.

This proposal asks the community to authorise the Proposal 12171 signers to move the position onto Injective-issued USDC, which is the new issuance standard for the Cosmos ecosystem.

Circle’s CCTP v1 Sunset Timing

Today, a USDC balance on Terra Classic can be turned back into a real dollar by one route: IBC to Noble, burn through CCTP, mint on an EVM chain, redeem with Circle. Every step in that collateral path depends on CCTP v1 in the chain.

Circle’s timeline on the CCTP v1 deprecation:

  • 31 October 2026 — burn limits on CCTP v1 begin stepping down
  • through November — capacity is progressively reduced
  • 1 December 2026 — the v1 contracts are paused

Noble is one of only three chains left on v1 with no v2 planned, and Noble has already entered maintenance mode and stepped away from Cosmos. The current factual situation suggest that nobody is coming to build a replacement.

Terra Classic’s LUNC/USDC positions

Verified on-chain on 5th of September 2026:

  • Terraswap: 417,875,015 LUNC, 21,169.12 USDC
  • Terraport: 411,812,561 LUNC, 20,577.14 USDC
  • Garuda DeFi: 404,251,874 LUNC, 20,519.11 USDC
  • Totals: 1,233,939,450 LUNC, 62,265.37 USDC

The community’s own share is 1,232,496,754 LUNC and 62,193.25 USDC.

Also check the pools directly to verify:

Execution plan

Phase 0 — Establish the route and rehearse.

A fresh IBC client, connection and transfer channel between Terra Classic and Injective will be established and relayed by LuncGoblins / Fragwuerdig.

Once the channel is live, a single small test tranche is run across the entire route, end to end, with real value. No migration begins until a test dollar has completed the full circuit and the signers have rehearsed the process once.

Phase 1 — Migrate in tranches.

Each pool is migrated in halves, not all at once, so that no LUNC/USDC pair is ever fully dark — each pair keeps half its depth throughout and traders keep a venue.

  • Pass 1: Terraswap → Terraport → Garuda, 50% of each position.
  • Pass 2: the same order, the remaining 50%.

If the dry run shows that signature collection is slower than planned, the initiative may complete the migration in three full-position tranches instead of six half-position ones, trading pool availability for schedule safety.

This proposal authorises either shape; the choice will be published before pass one begins.

Each tranche follows the same route:

  1. Terra Classic — withdraw the LP position and send the released USDC out. This is a single IBC transfer, routed automatically through Noble and onward to Ethereum via CCTP. The funds never rest on Noble.

  2. Ethereum — the USDC is minted, then burned again toward Injective through Circle’s CCTP v2.

  3. Injective — the USDC is minted and immediately forwarded to Terra Classic over the newly established channel.

  4. Terra Classic — the returned USDC are first deposited into the MS signature wallet for the 12171 framework. The signers will then deploy LUNC/USDC pairs on the same DEXs and with the same liquidity split.

The whole routing process, signature collection, pair creation, establishing relayers, configuration, route registration - all that will be technically supervised and supported by Till Zigker aka Frag aka LuncGoblins.

This proposal allocates no finanancial compensation for him nor the multisig signers.

Phase 2 — Report. Every tranche is published with transaction hashes in the initiative’s public ledger, as with the original deployment.

Because Injective-issued USDC is a different denomination, the migrated liquidity lands in new pairs. The three DEXs will need to create them. The old pairs are left in place, empty of community liquidity.

Timeline

  • early September: Injective client, connection and channel established and relayed
  • mid-September: Test tranche completed end to end, signers rehearsed
  • late Sept: Pass one completed
  • mid October: Pass two completed
  • 31st October: hard internal deadline, CCTP v1 capacity begins shrinking
  • 1st December: CCTP v1 paused

The whole migration process may be faster, depending how fast the multisig signers will be able to complete each tranches signature collection process.

Costs

Withdrawing liquidity triggers the 1.5% on-chain tax on the LUNC leg. This will trigger approximately $933 of tax on the community’s LUNC position. Providing liquidity is not taxed, so the tax is paid once, not twice, and splitting each pool into two tranches does not increase it.

Bridging and routing costs are negligible: the routed transfer out of Terra Classic carries a flat fee of about $0.09 per tranche regardless of size, plus Ethereum gas for the onward burn to Injective. Ethereum is used as the intermediate chain, as it was in the original Proposal 12171 execution.

No new community funds are requested.

These costs are absorbed by the position itself, which returns approximately 0.75% smaller than it stands today — almost entirely the burn tax. That is the price of moving our own money - you all wanted it this way.

Risks

  • The Injective channel cannot be restored in time. This is the principal risk and the reason Phase 0 comes first. If no channel can be established, the position should still be moved to safety on Injective and returned to Terra Classic once a route exists.

  • The relayer stops running mid-migration. Packets would sit unrelayed until the relayer resumes or another operator picks them up — a delay, not a loss, and the reason the channel is published for others to relay. Beyond the migration, the client must keep being updated inside its 14-day trusting period or it expires as the previous four did; maintenance responsibility should be handed to the chain’s ongoing relaying activity rather than left with one person indefinitely.

  • The migration fails midway. Funds stranded mid-route sit on Ethereum or Injective as fully redeemable native USDC. The failure mode is delay, not loss.

  • Single-signer transit. Mitigated by tranche size, by fixed destinations, by destinationCaller locking, by published addresses, and by a per-tranche public ledger. The alternative — a full multisig on every transit leg — is not available: Safe is not deployed on Injective, and neither is DAODAO. Building new multisig tooling on an unfamiliar interface, for ten signers, inside eight weeks, is a larger risk than the one it would remove.

  • Price movement between withdrawal and redeployment. LUNC released from a pool is held by the multisig for the duration of a tranche, measured in hours. Splitting each pool halves the exposure at any one time.

  • Circle announces an alternative for Noble. Circle has said it is working with Noble and Cosmos teams on an interim routing solution. Nothing has shipped. Betting community funds on an unannounced solution arriving inside eight weeks is not a plan, and the migration is worth doing regardless — Injective is where Cosmos USDC now lives.

A note to everyone else holding Noble USDC

Roughly 54,781 USDC of Noble-issued USDC sits on Terra Classic outside these pools, in ordinary wallets and contracts. That balance is subject to exactly the same deadline. After 1 December it can no longer be redeemed.

This proposal covers only the community-owned position. If you hold Noble USDC, act on your own behalf and do not wait for this migration to solve it for you.

Voting Options

YES — Authorise the Proposal 12171 signers to migrate the community’s USDC position to Injective-issued USDC as described, absorbing tax and bridging costs from the position.

NO — Leave the position on Noble-issued USDC.

ABSTAIN — No position.

NO WITH VETO — You consider this proposal a governance attack.

3 Likes
2

DarkSun will vote YES on this proposal :+1:t3:.