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In the early hours of Monday, the Luna Foundation Guard (LFG) announced that they would be handing out loans worth hundreds of millions of dollars in Bitcoin and stablecoin UST in a bid to defend UST’s peg amidst the high volatility period in the market.
Following reports on Sunday by The Block, UST — the algorithmic stablecoin on the Terra crypto ecosystem tied to the dollar— took a slip below the $1 equivalent, although it has since gained some ground from the dip on Saturday. UST is currently trading at $0.9955 to Tether USDT on Binance as at time of writing.
The Luna Foundation Guard addressed the community via a tweet, saying that it would ensure to “proactively defend the stability of the $UST peg & broader Terra economy, especially under volatility and the uncertainty of macro conditions in legacy markets.”
The LFG further added in their Tweet thread:
“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,” the group explained in the thread.
The non-profit group —which is currently based in Singapore—was established in January in a bid to support the Terra ecosystem and “the sustainability and stability of Terra’s algorithmic stablecoins,” according to the publication at the time of the announcement.
Sometime in February, The Block reported that LFG had raised $1 billion to build a bitcoin-based reserve aimed at serving as a support mechanism for UST’s peg. At the time of writing this post, LFG reportedly holds more than $3 billion worth of bitcoin in its reserve.