[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.
@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.
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.
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.
Those funds don’t belong to the protocol; they belong to LunaClassic, and LunaClassic has no reason to grant rewards for a dead protocol. Someone explain why! I don’t understand anything, honestly.
To help pay for it, I think we should increase the tax fees but ***keep the original tax numbers*** the same (people seem happy with it the way it is). So burns would stay at .4% CP and OP would share .1% but an extra .2% (.7% total tax) would go into buying back Ustc in order to make the pool stronger over time, instead of minting or running out completely, we could pump ustc in volume and create buying pressure, while the burns would increase naturally and staked ustc would leave circulation for 21 days minimum. Also a hardcapped 25% yearly payout would also be a good idea, if you have the funds from the tax increase to fund it.
Either way, thank you Vegas for removing the minting idea completely, ill be happy to vote yes.
This version is better than the previous one because it removes minting and narrows the scope.
However the core issue remains unresolved. The proposal still asks the community to explore and eventually activate APR funded first by Community Pool USTC, while leaving productive yield sources to be figured out later.
Real yield should be the foundation of the design, not a hoped-for transition after launch.
USTC staking can be a major opportunity if structured correctly. Terra Classic already has a growing ecosystem of L2 dapps, many of which use USTC in different ways. Their biggest constraint is lack of liquidity, even though they can generate real yield. A neutral, balanced, onchain framework for deploying Community Pool USTC into productive use would let the CP grow its USTC holdings over time instead of draining them. For example, if only 80% of yield were returned to stakers and 20% were retained, the CP could steadily accumulate more USTC. That creates a much healthier dynamic: short-term reduction in circulating supply through staking, combined with longer-term strengthening of USTC as more supply is absorbed into productive onchain activity.
The proposal plans to use 30M USTC from the Community Pool to fund a 2.5%–5% APR. This is a mouse trap for me; the Community Pool is the last line of defense for ecosystem development. Using it to subsidize yields for holders is a desperate move. Once this pool dries up—and it will—without a new revenue stream, the staking system will collapse, triggering a sell-off far worse than what we see today.
MM2 is currently “Vaporware.” It does not exist on the Mainnet, has not been audited, and has no concrete launch date. Building a financial staking framework on a module that hasn’t even been born yet is reckless. You can’t promise a menu featuring “Deep Sea Lobster” when you haven’t even bought the boat to go fishing.
5% is a negligible figure that will have zero impact on price action. In a volatile market, locking up such a small portion of the supply won’t stop “Whales” from dumping. It only traps retail investors (like us) while the remaining 95% of the supply remains liquid and ready to crash the market.
In the history of Terra Classic, governance can change at any moment. If the system faces a liquidity crisis while trying to pay out staking rewards, the community could easily vote to “mint just a little bit” to save the system. “No Minting” today could easily become “Necessary Minting” tomorrow. So, I think we need to wait for the MM2 publish and running 1st and start to think about this later.
After reviewing the updated no-mint version, I will vote YES.
The removal of minting significantly improves the proposal and aligns it with a more sustainable approach.
That said, I still believe the main challenge will be the attractiveness of rewards. Without strong revenue sources, APR may remain relatively low, which could limit participation.
From a strategic standpoint, I think timing will be key. Ideally, this should align with or follow MM2.0, once real yield mechanisms are in place.
Overall, I support moving forward with exploration, while remaining mindful of these constraints.
This is a great answer that puts things in the deserved perspective. This proposal idea is like:
We have a cake, lets eat it, then we see if we can somehow get more cake for when we run out of cake.
A sensible perspective would indeed be: Investigate and come up with a fully functional and secure enough way of producing profits, then distribute those profit in the APR that is possible without eating your cake. If profits are more easy to get with Lunc, then produce profit in lunc to the OP and then pay Lunc for staked USTC. It doesn´t matter if it pays Lunc or Ustc as long as it comes from profits.
Same works with cows, but if you eat the cow instead of making it produce more cows and milk, you end up with no cow and then investigate how to produce a cow… Don´t eat the cow bro. Eat the product made by the cow.
