The Luna Foundation Guard, a non-profit organization that exists to support growth in the Terra ecosystem, has provided an update on its massive reserves. The update comes amid questions from the crypto community following the crash in LUNA and UST prices.
LFG’s report also includes intentions to offer a cushion for UST holders after the algorithmic stablecoin lost its $1 peg and fell below 20 cents.
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.
LFG Spent Its BTC Reserve Defending UST Amid LUNA Price Fall
The report suggests that the LFG deployed massive amounts from its reserves in a bid to defend UST’s peg after the stablecoin showed signs of a crash on May 8, 2022. Efforts from the foundation included selling around 80,000 BTC as well as millions in USDT and USDC.
However, LUNA and UST prices continued to crash all week. As of May 16, the LFG claims to hold less than 400 BTC.
Notably, the report declares that the foundation attempted to defend the peg through on-chain swap and BTC reserves transferred to a counterparty. Members of the community have asked for more clarity regarding the identity of the mentioned counterparty.
Also, users have asked the LFG to back up their claims with relevant transaction hash (TX).
Following the LUNA’s price crash and UST’s tumble from its $1 peg, a plethora of suggestions have flooded the Terra space on how to move forward and possibly salvage the protocol.
Although no word has emerged from Terra CEO Do Kwon as of press time, crypto proponents and notable figures like Binance CEO Changpeng Zhao and Ethereum Founder Vitalik Buterin have opined that a compensation strategy for UST holders is indeed the way to start a recovery.