TerraLabs Sold Over 80,000 BTC To Rescue Its Stablecoin, Luna
18 Maggio 2022 - 2:00PM
NEWSBTC
The crypto market has experienced many bloodbaths in the past. But
last week’s crash had more catastrophic effects on the market than
recent bearish trends, mainly on the stablecoins. UST, a stablecoin
issued by Terraform Labs, is an example that stunned the crypto
world as the coin collapsed and dropped its value from $1 to $0.15
between May 9 to May 14, nearly losing 85% of its value. Afterward,
on May 16, the Luna Foundation Guard (LFG) announced on Twitter
that they had sold out their Bitcoin (BTC) reserves between May 8
to 10 to rescue its stablecoin. Related Reading | Bitcoin Marks
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It was not the first time a crypto project collapsed. But the
previous collapse had not the terrible effects as the stablecoin
UST has suffered in the most recent bloodbath. LFG, an organization
aimed at supporting the blockchain innovators developing a
decentralized economy, revealed its reserves of 80,394 BTC and
other digital currencies it held as of May 07, 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. Similarly, the firm
explained it quickly shifted the asset by transferring the digital
assets to a counterparty, which does not require short notice to
allow large-sized transactions. 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. In its desperate attempt to maintain the value
of the peg, TerraLabs, relying on the LFG, had carried out the
following BTC exchange besides others. “LFG sold 33,206 $BTC for an
aggregate 1,164,018,521 $UST.” Speaking about the remaining 313 BTC
in circulation, the Luna Foundation has announced that it plans to
distribute them among Terra’s community to reimburse affected
users. The LFG revealed in a tweet; The Foundation is looking to
use its remaining assets to compensate remaining users
of $UST, smallest holders first. We are still debating through
various distribution methods; updates to follow soon. Suffering the
effect of collapse, the Luna made the deepest dive on Saturday when
it sniffed the bottom. Afterward, the volatile token skyrocketed
and gained a whopping $720% in just 24 hours, reaching its value at
$0.00040154. Likewise, Luna’s trading volume surged 1000% after the
TFL restarted its block production after a 9-hour halt. Related
Reading | Ripple (XRP) Price Picks Up As SEC Legal Showdown Drags
On As things stand now, it’s hard to speculate whether or not the
Terra network can recover from such a huge loss. But, the recent
gains give frustrated investors momentary ease. And it remains to
see whether the token will have the potential for full-fledged
recovery. Featured image from Pixabay and chart from
TradingView.com
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