What happened to the bitcoin reserve behind Terra’s UST stablecoin?
Bitcoin has fallen below $26,000 since December 2020. (Photo credit: CFOTO/Future Publishing via Getty Images
CFOTO via Getty Images| Future Publishing via Getty Images
Investors were eager to discover what the future holds for more than $3 billion in bitcoinTerra, a crypto company, bought Terra in order to support its failing stablecoin. They now have the answer.
Do Kwon created the Luna Foundation Guard fund, which is dedicated to protecting Luna Foundation Guard. said Monday it spent almost all of the bitcoin in its reserve last week in a futile attempt to save terraUSD — or UST, for short.
A total of over 80,000 bitcoins had been accumulated by the foundation, which was worthOver $3Billion was spent last week. Kwon promised that he would use bitcoin to offset a sharp fall in the price of UST.
Luna Foundation Guard posted a series tweets saying that 52,189 Bitcoin was transferred to “trade with a counterparty” because UST fell below the $1 peg. Terra also sold 33,206 bitcoin in an attempt to protect the peg.
Luna Foundation Guard, which has approximately $9.3million in reserve as of Monday, had only 313 bitcoins remaining. The firm said it would use the remainder of its assets — which include some other digital tokens, like BNB and avalanche — to “compensate remaining users” of UST.
Luna Foundation Guard stated that they are still evaluating different distribution methods. Updates will follow shortly.
UST can be described as an “algorithmic stablecoin”. UST was different than USDC or tether which held fiat assets to back their tokens. Instead of these, UST used a complex mixture code with a floating token named luna to balance supply/demand and stabilise the price.
Luna also began selling off when UST fell below $1 last Wednesday, causing UST to plummet to 30 dollars while luna lost its value. CoinGecko data shows that UST has dropped to 9 cents.
Terra’s tokens have fallen to the ground rippled through crypto marketsMore than $200 billion worth of wealth were wiped away in one day. BitcoinBitcoin fell to $26,000 on Thursday, the lowest point since December 2020.