The Luna Foundation Guard, which is in charge of maintaining the peg of UST, the Terra ecosystem’s stablecoin, has disclosed how it used the available Bitcoin reserve prior to the Terra ecosystem’s latest catastrophe. To try to keep the value of UST stable, the group sold some of the bitcoins it possessed immediately and exchanged the rest on separate dates. More than 80,000 BTC were held in the reserve.
Terra blockchain is said to have spent $3.5 billion to keep the ceiling from caving in on itself.
The Guard of the Luna Foundation Explains Backup Actions
The Luna Foundation Guard (LFG), the group in charge of maintaining the dollar peg of UST, the Terra ecosystem’s algorithmic stablecoin, has broken its silence to explain how the funds in its custody were used. The Luna Foundation Guard possessed a stockpile of 80,394 BTC, among other virtual currencies, as of May 7, 2022, according to LFG.
The institution has accumulated over 80K BTC, which would be utilized in the event of market instabilities influencing the value of the terra USD (UST).
According to social media sources, the organization used nearly all of its BTC holdings in an unsuccessful attempt to save UST. Three separate operations were used to create this. LFG sold 26,281,671 $USDT and 23,555,590 $USDC for an aggregate of 50,200,071 $UST in the first defensive transaction following the de-peg event.
The LFG further stated:
‘Transferred 52,189 BTC to trade with a counterparty, net of an excess of 5,313 BTC that they have returned, for an aggregate of 1,515,689,462 $UST.’
The peg was not recovered despite the LFG’s efforts. Terraform Labs traded the rest of the BTC reserve on May 10, when UST’s market price had reached $0.75, according to LFG. The selling of 33,206 BTC for a total of 1,164,018,521 UST was part of this deal.
Only 313 BTC remains in the Luna stockpile, indicating that the majority of the BTC possessed by the organization was used in the kicking game. other cryptocurrencies in the reserve, such as 39,914 BNB and 1,973,554 AVAX, also weren’t touched and remain in the company’s ownership. However, no good explanation exists as to how these should be used in the future.
The LFG disclosures provide light on how the Terra de-peg affair occurred and how the resources were used. Elliptic, a blockchain analytics and compliance firm, did an earlier investigation of the transactions and discovered that the majority of the cash were routed towards exchange platforms: Binance and Gemini.
“It is not possible to trace the assets further or identify whether they were sold to support the UST price,” the company said.
The recent drop in the value of Luna and other crypto has administrative hunters on the hunt. What does the future hold for cryptocurrency?
Was this writing helpful?