The Luna Foundation Guard (LFG) has raised $1 billion in a private token sale to allow the group to safeguard the peg of UST, Terra’s flagship stablecoin, against market instabilities. While the token has an algorithmic method to maintain its dollar value, this decentralized reserve — which will be stored in BTC — aims to allow the foundation to intervene if these methods prove to be insufficient.
Luna Foundation Guard Introduces $1 Billion BTC Decentralized Reserve
Luna Foundation Guard (LFG), a non-profit organization that was established January to help develop Terra’s ecosystem, announced it is creating a forex reserve decentralized to protect the dollar peg. To achieve this, the foundation organized one of the largest private token sales in crypto history, raising $1 million from several VC companies.
Based on reports from the official Terra Twitter account, the sale was led by Jump Crypto & Three Arrows Capital, with participation from Defiance Capital, Republic Capital, GSR, and Tribe Capital among others. Terraform Labs made a $4 billion donation to create the foundation.
When the normal stability mechanisms of the token are disrupted by extreme market conditions like a possible bank run on Terra native coins, the foundation will have a reserve in BTC.
Do Kwon is the CEO of Terraform Labs. revealedLuna Foundation Guard intends to increase the size of this central reserve in the near future.
UST Market Cap Exceeds $12 Billion
These events continue to increase the market capitalization for UST. The token’s value has increased by more than $1B since January 24th and is still the best-known decentralized stablecoin on the market. As of writing, according to numbers from Coingecko, UST’s current market cap is $12.3 billion dollars.
Do Kwon remarked– The importance of Terra and the existence UST as a decentralized stabilizecoin in the wake of recent bank accounts seizures occurring in several countries.
Each headline is an endorsement of some sort these days. UST. It is clear that today’s decentralized money offers many benefits.
The second most-valuable decentralized stablecoin by market cap, the ethereum-based DAI, has a current market cap of $9.6 billion, more than $2 billion behind Terra’s stablecoin. One of the founders of Maker, the organization behind DAI, declared in January that UST was a “solid Ponzi” that would go to zero in a bear market.
How do you feel about the Luna Foundation Guard’s $1 BTC reserve? Leave a comment below.
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