Terra’s Luna Foundation Guard Deploys $1.5B USD in Assets to Stabilize UST Peg
As the overarching Crypto market continues its downward trend.
Luna Foundation Guard (LFG), a nonprofit that is a part of the Terra ecosystem, announced Monday, May 9, that it will deploy $1.5 billion USD in assets to “protect” Terra US Dollar’s (UST) peg to US dollar. This news comes just a week after the foundation acquired the same amount in Bitcoin.
4/ As a result, the LFG Council has voted to execute the following:
- Loan $750M worth of BTC to OTC trading firms to help protect the UST peg.
- Loan 750M UST to accumulate BTC as market conditions normalize.
— LFG | Luna Foundation Guard (@LFG_org) May 9, 2022
The de-pegging from the USD comes as the overall market sees a continued downtrend. In order to correct this and re-peg UST to the United States dollar, the LFG council approved a loan of $750 million USD worth of bitcoin (BTC) in an over-the-counter trade to different firms. Additionally, it approved a loan of $750 million UST to buy back BTC as the market rebounds.
“While buys and sells of UST are not meaningfully directional now, we felt it was valuable to have capital ready to be deployed in the current market,” added Do Kwon, Terraform Labs founder, in a tweet of assurance to those who thought LFG might be looking to exit its BTC position. “As markets recover, we plan to have the loan redeemed to us in BTC, increasing the size of our total reserves.”
While re-pegging has not been achieved yet, the efforts do seem to be making progress, as UST has recovered to $0.89 USD compared to its low of $0.68 USD, according to data from CoinMarketCap as of the time of writing.
In his latest tweet, Kwon simply stated: “Deploying more capital — steady lads.”
In other news, Instagram is now allowing some users to display their NFTs.