In light of the heightened market volatility, Luna Foundation Guard (LFG) announced on May 9 that hundreds of millions of dollars in Bitcoin (BTC) and Terra (UST) so as to defend the peg of Terra (UST).
Terra (UST), the algorithmic stablecoin related to the Terra cryptocurrency ecosystem, dipped under its targeted $1 parity on Sunday, albeit it has already rebounded from the low of May 7. On Binance, Terra (UST) is currently trading at $0.9955 as compared to Tether (USDT) at the time of writing.
LFG took to Twitter to say that it “will proactively defend the stability of the $UST peg & broader Terra economy, especially under volatility and the uncertainty of macro conditions in legacy markets.”
5/ The traders will trade the capital on both sides of the market to help accomplish both #1 and #2, eventually maintaining parity of the LFG Reserve pool (denominated in BTC) as market conditions progressively stabilize.
— LFG | Luna Foundation Guard (@LFG_org) May 9, 2022
In the thread, the following details were elaborated: “the traders will trade the capital on both sides of the market to help accomplish both #1 and #2, eventually maintaining parity of the LFG Reserve pool (denominated in BTC) as market conditions progressively stabilize.”
Terraform Labs co-founder Do Kwon, Terraform Labs head of research Nicholas Platias, and Jump Crypto president Kanav Kariya are among the members of the governing council of Luna Foundation Guard (LFG).
Per an announcement post, the non-profit organization based in Singapore was created in January 2022 to foster the Terra ecosystem and “the sustainability and stability of Terra’s algorithmic stablecoins.”
The Block stated in back February that LFG had gathered $1 billion to create a Bitcoin (BTC) reserve that would act as a backstop for the peg of Terra (UST). The reserve of LFG had more than $3 billion in Bitcoin (BTC) by the end of last week.
Following the publishing of the announcement, Kwon initiated another thread on Twitter to say that “[w]hile 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.”
He went on to say that “as markets recover, we plan to have the loan redeemed to us in BTC, increasing the size of our total reserves.”