In the past, there have been many bloodbaths on crypto markets. But last week’s crash had more catastrophic effects on the market than recent bearish trends, mainly on the stablecoins. The crypto world was stunned by the collapse of UST (a Terraform Labs stablecoin) which dropped from $1 to $0.15 in May 9-14. It nearly lost 85%.
The Luna Foundation Guard (LFG), was formed on May 16th. announced on TwitterThey had sold their Bitcoin (BTC), reserves from May 8-10, to save its stablecoin.
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The collapse of a crypto-project was not the only one. The previous crash did not cause the exact same devastation as that which occurred with the stablecoin UST in this latest crisis.
LFG is an organisation that supports blockchain innovators in developing a decentralized economic system. revealedIts reserves of 80.394 BTC, and other digital currencies, were as of May 7, 2022.
The Foundation reportedly began converting its assets into reserves against UST on May 8, 2018, when UST’s price fell significantly. It took these steps immediately since it is a non-profit firm with a primary motto to strengthen Terra’s ecosystem.
Similar to the previous explanation, the company explained how it swiftly transferred the asset to a counterparty. A counterparty does not need to be notified in a hurry to permit large-sized transactions. Source: LUNA/USD price chart from TradingView.com
LFG Strives To Maintain Luna Peg
In line with the Master Services Agreement that was inked on January 10, 2022, TerraForm Labs (TFL), on May 10, said it managed to execute all financial, administrative, and operational duties that were needed to back its coin when the value of Terra’s $UST had decreased to $0.75.
TerraLabs used LFG to keep the price of the peg at its lowest point. They also conducted the following BTC swaps.
“LFG sold 33,206 $BTC for an aggregate 1,164,018,521 $UST.”
Talking about remaining 313 BTC in circulation, the Luna Foundation has announced that it plans to distribute them among Terra’s community to reimburse affected users.
In a Tweet, the LFG was disclosed
Foundation intends to make use of its assets remaining to pay out any remaining customers $USTFirst, the smallest holders. We continue to debate various distribution methods. Updates will follow shortly.
The Luna suffered the effects of collapse and made Saturday’s deepest dive when it reached the bottom. The volatile token soared and reached a record $720% within 24 hours. Likewise, Luna’s trading volume surged 1000% after the TFL restarted its block production after a 9-hour halt.
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As things stand now, it’s hard to speculate whether or not the Terra network can recover from such a huge loss. However, investors who are frustrated by the losses have experienced a temporary relief. It remains to be seen if the token can make a full recovery.
Featured image by Pixabay, chart from TradingView.com