In the midst of the Cryptocurrency market crash, the Luna Foundation Guard (LFG) plans to give out thousands of millions of worth of Bitcoin in order to support Terra USD’s peg to the US dollar.
The Luna Foundation Guard (LFG), a Singapore-based foundation is an integral part of the Terra (LUNA) blockchain and was founded to act as a security to the Terra network’s stablecoin UST so that this will help to maintain its relation with USD.
According to the recent reports by The Block, Terra algorithm’s UST stablecoin has plunged below $1 though the stablecoin appears to have recovered from its Saturday low. At the time of reporting, UST is valued at $0.9959.
The LFG took to Twitter to announce that the foundation will proactively defend the UST stability & widen the Terra economy, especially under volatility and macro condition uncertainty in the legacy market.
LFG Is Not Trying To Exit Its Bitcoin Position
Though the details are not complete at this point in time, in the early hours today, the LGF’s Twitter account stated that it will first deploy $750 million worth of Bitcoin to over-the-counter (OTC) trading firms in order to trade the capital.
Later once the crypto market stabilizes, the LFG will have a $750 million UST loan from Terraform Labs so that it will help to rebalance its reserves.
Additionally, Terraform Labs founder Do Kwon claimed via Twitter that “LFG is not trying to exit its Bitcoin position” but this act of lending the capital in the short term will make UST stronger.
The LFG, a Singapore-based non-profitable organization was founded in January so that it could act as a support system to the Terra algorithm’s stablecoin UST.
Following this, in February, there was an announcement that the LFG had raised $1 billion to form Bitcoin-based reserves to assist UST’s peg mechanism.
Over the past seven days, Terra (LUNA) has fallen more than 20% in the ongoing crypto market crash. The concerns were raised as Terra’s UST stablecoin was pulled back below $1.
Was this writing helpful?
After Terra’s UST, This Stablecoin Loses it’s Peg.What’s The Future Of Stablecoins?
The crypto economy was under complete volatility for the past few weeks, but the space faced had the worst one after one of the largest stablecoins, TerraUSD (UST) de-pegged from its $1 value.
After UST de-pegged, Do Kwon, the founder of Terraform Labs, shared an update regarding the rescue plan wherein he said the investors will be reimbursed and the developers are working on it.
Fantom Stablecoin Depegs
After UST de-pegging, today, Fantom Stablecoin DEII becomes the latest one to lose its dollar peg. Deus Finance’s stablecoin, DEI last its peg against the US dollar and dropped as low as 54 cents in European hours today.
The algorithmic stablecoins are nothing but the one that is automatically connected or pegged to the price of another currency.
These are not like the centralized alternatives like Tether (USDT) or USD coin (USDC) as these are backed by actual dollars or anything that is equivalent to stored assets.
DEI operates with Deus and is valued at over $62 million by market capitalization. Deus is a Fantom-based decentralized finance project. This collateral ratio with the dollar is monitored using arbitrage bots to maintain its dollar peg.
On Sunday, DEI was trading 3 cents below its peg before losing 20 cents, the possible reason being that traders exchanging DEI tokens for USDC amidst the liquidity on decentralized exchanges caused price fluctuations.
The lower prices have led to DEI being sold for other tokens in turn leading to the price drop.
According to Deus Telegram channel, the lower liquidity was partly due to traders moving out of stablecoin pools after fading confidence due to UST’s bottoming below $1.
However, DEI has now reclaimed the 72 cents with Deus developers proposing a re-pegging plan with debt tokens to prevent the collapse of the peg in the future days.
Was this writing helpful?
Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
Terra’s Fork, Terra Classic ($LUNC) : Do Kwon’s New Revival Plan To Save LUNA Foundation
Terraform Labs CEO and co-founder Do Kwon has announced forking the Terra network into a new chain.
This latest addition proposes to fork the Terra chain into a new “Terra” with token “Luna” while the old chain would become “Terra Classic” and the original Luna tokens would become “Luna Classic” (LUNC).
However, the new chain will not be linked to the TerraUSD (UST) stablecoin. Meanwhile, the old Terra blockchain will continue to exist with UST and will be called Terra Classic (LUNC).
The new Luna would be airdropped to Luna Classic holders, stakers, Terra holders and app developers of Terra Classic. The intention is for the chain to be “community-owned” and target a 7% inflation rate through staking rewards.
The Terraform Labs will put the proposition up for an governance vote on Wednesday. According to the arrangement, Terraform Labs will cut the Terra center delivery and make network send off directions accessible for validators on Saturday.
Under Kwon’s plan, if passed, the new LUNA blockchain will go live on May 27.
After Only 313 Bitcoin Remaining with LFG, Is BTC Price in Safe Hands Now?
The Luna Foundation recently released a statement citing the balances on their reserves as the platform’s Bitcoin reserves made a huge noise of let. The thread documented how the platform disbursed millions of dollars worth of crypto and eventually failed to stabilize the destabilized assets.
The foundation clearly states the number of BTC and the other crypto reserves the platform holds. As per the recent statistics, LFG holds only 313 Bitcoin along with 39,914 BNB, 1,973,554 AVAX, 1,847,079,725 UST and 222,713,007 LUNA of which nearly 90% of LUNA has been staked with validators.
Therefore, now the question here arises, whether the crypto space has overcome the bearish scenario completely?
Huge ease among the crypto traders was witnessed as a huge amount of BTC long bets were placed on Bitfinex. According to some reports, nearly 84,500 BTC in long positions has been placed. Therefore, it clearly indicates that the traders are now extremely bullish on the BTC price and expect a huge jump incoming for the asset in the upcoming days.
On the contrary, what if the BTC price slashes a bit beyond the present support levels, which may be a huge stop loss for long bets? Therefore, in such a case, Bitcoin current is in a very decisive position as a slight plunge from here may again lead to a huge long liquidation. This in turn may slash the price below $27,000 igniting the toughest bearish phase in history.
Therefore, a significant dump may be heavily expected if, case, the BTC prices break down or heads strongly towards the lower support. However, the technicals point out that a significant dump may make its way out as the selling volume may soon make its room.
Was this writing helpful?
Big33 days ago
Snoop & Gary Vee Got “Ownership” Of A Basketball Team With Ice Cube’s BIG3 NFTs
Bitcoin3 days ago
Veteran Investor Mark Mobius Expects Bitcoin To Fall Further — Cautions Crypto Traders Against Buying The Dip
Bitcoin2 days ago
US, UK, Canada, Australia, Netherlands Share Crypto Criminal Leads, Including A Potential $1B Ponzi Scheme
Crypto news5 days ago
Terra’s Rescue Plan: $1.4B UST Set To Burn, While 240 million LUNA Being Staked
Uncategorized6 days ago
Is Terra (LUNA) Dead?
Congress2 days ago
SEC Commissioner Expects Tighter Stablecoin Regulation — Yellen Says Stablecoins Not Real Threat To Financial Stability
Cryptocurrency3 days ago
How Much Money Could You Make From Investing In Uniswap (UNI), Monero (XMR), And Quitriam Finance (QTM)?
Biden4 days ago
Rich Dad Poor Dad’s Robert Kiyosaki Plans To Buy Bitcoin When The ‘Bottom Is In’ — Says It Could Be At $17K