[Signal Proposal] USTC Staking System (No Minting Framework)

General
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[Signal Proposal] USTC Staking System (No Minting Framework)

Summary
This proposal seeks to gauge community interest in exploring the development of a USTC staking system on-chain, explicitly designed without any minting.

This is a signal proposal only. No funds will be used, and no rewards will be activated at this stage.

Objective

The objective is to evaluate whether the community supports initiating work on a staking mechanism that could:

  • Reduce circulating supply through staking participation
  • Decrease immediate sell pressure
  • Increase on-chain activity and utility
  • Strengthen the Terra Classic ecosystem at the Layer 1 level

Proposed Framework

The approach is structured into three phases to ensure a controlled and transparent rollout:

**Phase 1 – Mechanism Design **

  • Design and development of the USTC staking mechanism
  • No rewards distributed
  • No minting involved

This phase is purely technical and exploratory.

Phase 2 – Activation & Initial Parameters

A separate governance proposal will be required to activate staking.

Initial parameters (subject to governance approval):

  • Limited Community Pool allocation (e.g. ~30M USTC)

  • Conservative rollout:

    • Target: ~5% of circulating supply staked
    • APR: ~2.5%–5% (adjustable)

The goal is to introduce staking in a controlled manner while minimizing potential sell pressure.

Phase 3 – Sustainability Model (Post-Launch Review)

  • Minimum 3-month evaluation period after activation

  • Assessment of system performance, participation, and impact

  • Gradual transition toward real yield sources, such as:

    • MM2 fees
    • On-chain activity (fees, gas, etc.)

  • Governance-driven adjustments to reward parameters if required

The objective is to move toward a self-sustaining model with reduced reliance on the Community Pool.

Key Principles

  • No minting at any stage
  • Governance control at each phase
  • Conservative and phased implementation
  • Focus on sustainability through real yield
  • Alignment with long-term ecosystem growth

Conclusion

This proposal does not implement staking.

It only asks the community whether they support exploring and developing a USTC staking system under a no-minting framework.

If approved, a technical proposal will follow to define the mechanism in detail.

If you want, I can also:

  • Add a stronger title for visibility
  • Or include a “common concerns” section to pre-empt criticism (this will help a lot given what happened last time)
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@Vegas thats better, the community will be more open to this, and i’ll be a yes for exploring the system at this stage.

I’m still concerned with the community pool part though, as relying on that is not an option. So I hope the proposal that follows with the technical details does not rely on the CP, as that’s not what it’s meant for.

It needs to rely on chain yields only.

Then I can’t see any issue going forward.

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Over 40 million USDC in the Anchor Protocol reward dispatcher. Those unearned rewards should never have been sent to Anchor Protocol. You also have 12 billion LUNC for LUNC staking. Why not start there? Those are legitimate rewards and were never generated by Anchor. If you want the contract addresses, I can provide them.

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The community doesn’t want to use rewards from other pools like Oracle Pool or Community Pool, much less mint coins. They simply ask the community and investors.

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Last year i identified some dead protocols that could be used for this. But at that tike ppl said no.