UST refers to TerraUSD and it is a stablecoin that is built on the Terra blockchain rather than the fiat dollar. It uses a system where to mint a UST, you have to buy a dollar’s worth of LUNA and exchange that LUNA for the UST. This means that to create $1 worth of UST token, you would have to burn $1 worth of LUNA and vice versa.
In crypto terms, burning doesn’t mean setting the coin on fire since they are not tangible assets, rather it involves destroying the burnt coin or token by sending it to a frozen wallet from which it cannot be recovered.
Here are a couple of key differences between USDC and UST.
USDC is pegged to the US Dollar
Its base currency is a major difference between USDC and UST. As we have highlighted above, USDC is pegged to the dollar, which means for every USDC you have you can exchange it directly for an equivalent amount in dollars. UST on the other hand has a go-between which is LUNA, while UST is also pegged to the dollar, LUNA plays the role of an all-important middleman in this transaction.
USDC has fiat reserves to ensure stability
Another major difference that stems from the above is fiat reserves. USDT has 100% of its tokens in cash reserves in reputable banking institutions across the US. On the other hand, UST does not have these reserves.
USDC is available on multiple blockchains
One more difference between both stablecoins is the number of blockchains they are available on. USDT started in the Ethereum Blockchain but it has since expanded and it is available and compatible with multiple blockchains including Solana and Tron. On the other hand, UST is only available on the Ethereum and Terra Blockchains.
Essentially, if you are looking for which coin is much more stable between these two stablecoins, USDC has proven that it is definitely a genuine stablecoin with a bright future.