Terraform Labs ‘gifts’ $880 million in LUNA to Luna Foundation Guard (via _vishalchawla)
Terraform Labs said it ‘gifted’ 10 million worth of LUNA tokens to Luna Foundation Guard.Terraform Labs has gifted 10 million LUNA to the Luna Foundation Guard to help boost the stability of the stablecoin UST.
The funding will likely go toward the foundation’s goal of acquiring additional collateral — so far in the form of bitcoin and avalanche — to underpin UST. It may also be partially burned to help maintain UST's peg to the US dollar. Terraform Labs is the development firm behind the Terra blockchain and the UST stablecoin. It founded the Luna Foundation Guard, a Singapore-based non-profit, in January and tasked it with maintaining the stability of Terra’s algorithmic stablecoins and to buy all reserve assets for UST on behalf of the Terra stakeholders.
Currently LUNA, a free floating cryptocurrency that’s the native token of the Terra blockchain, is used to keep UST’s peg to the dollar. A burning mechanism is used to stop UST’s price going above a dollar. On the flip side, if it drops below the dollar, traders can arbitrage the difference. Critics have said —— that this is an unsustainable strategy, since it relies on the declining reserves of LUNA to keep its peg.
For this reason, the foundation is attempting to pivot toward a model where UST’s reserves are made up of high ranking cryptocurrencies, like bitcoin. In recent months, the foundation has built up a large treasury of cryptocurrencies as collateral for UST. The foundation has purchased
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