Luna will loan $1.5 billion in BTC and UST to defend the stablecoin’s peg and the LFG decision came after the stablecoin lost its dollar peg and plummeted to $0.98 over the weekend so let’s read more today in our latest cryptocurrency news.
This is not the first time that UST lost its peg but the algorithmic stablecoin did it again after the Luna Foundation Guard purchased $1.5 billion in BTC to fortify the stablecoin reserve. Luna will loan $1.5B in BTC and the stablecoin TerraUSD to defend the peg amid a period of market volatility and uncertainty of the macro conditions in the legacy markets. The Singapore-based organization tweeted:
“Terraform Labs (TFL) founder Do Kwon also clarified that the Luna Foundation is not trying to exit its Bitcoin position with the move to loan out $750 million of the cryptocurrency. Rather, the goal is to strengthen the liquidity around the UST peg.”
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
It all started when UST witnessed high-volume withdrawals from the Terra Anchor Protocol and it is important to note that the USD deposits now earn investors 18.8% APY and Anchor’s total UST deposits reduced from $14 billion to $11.2 billion results. As per Pedro Ojeda who co-founded SplitBrick, 16,000 addresses interacted with Anchor during the same timeframe, and twice as many were withdrawn than deposited. The executive asserted that the market didn’t appear to originate from the retail players and Terra’s Twitter handle claimed that a small chunk of whales accounted for the bigger chunk of the outflows.
One example caught the attention which was a freshly funded address that bridged $84 million of UST to Ethereum and as per Polygon’s Mudit Gupta, the address initiated bridging before Terraform Labs was removed from liquidity. The huge quantities of UST were withdrawn from the liquidity pools on the decentralized exchange. Do Kwon confirmed that $150 million of UST were removed by TFL from Curve to operate for the deployemnt into the 4pool next week so the co-founder confirmed that $84 million dumps weren’t done by them.
As earlier reported, Terra’s LUNA dropped 10% to $65.80 on fears that Terra’s stablecoin UST may lose its peg. The stablecoins are cryptocurrencies that are pegged to the fiat currency such as the US Dollar on a 1:1 basis and a de-peg refers to stablecoins going above $1 or below $1.
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