Luna Foundation Guard Looks for Finances as UST Falls From Peg Again
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Luna Foundation Guard (LFG) has been fighting to save its UST stablecoin from falling off its dollar peg once again.
The collapse of the world’s third-biggest stablecoin ecosystem has surely added gasoline to the fire as if the enormous crypto market drop wasn’t awful enough already.
The Luna Foundation Guard, a Singapore-based non-profit supporting the Terra network, has been seeking out investors in an attempt to raise money to sustain the unstable stablecoin.
According to “those acquainted with the situation” cited by The Block, the LFG plans to raise more than $1 billion to secure the UST stablecoin.
Stablecoin has dissociated from the dollar and dropped below $0.70 twice in the last week, so the move is not surprising.
There is no need to be alarmed
Terraform Labs CEO Kwon Do has been silent about the snafu, and no money has been verified yet. At the time of this writing, he had posted a mysterious message on Twitter:
“Close to releasing a recovery strategy for $UST,” said the last post, published only a few hours earlier. “Stay with it.”
Luna released a statement on May 10 to counteract the flood of misinformation that has flooded the mainstream media. If the UST market capitalization exceeds that of the collateral token, LUNA, there will be no “death spiral.”
According to the report, Terra’s economy, including network economic activity and associated cash flow, supports UST’s on-chain user activities. “Peg recovering takes longer to do so given the limitations, but it bounces back,” it said.
Almost all of the USD reserve amount was utilised to support the stablecoin, according to a Google analytics dashboard. It has fallen from about $4 billion to roughly $146 million, where it is now.
Despite the stablecoin’s recovery on May 10, it has now taken a turn for the worst on May 11. According to CoinGecko, UST dropped for the second time in a few hours, falling to a price of $0.696. Since then, it has made a little comeback and is now trading at $0.805, as of the time of this writing.
Many arbitrage possibilities have arisen between UST and LUNA and other stablecoins after the shift. According to CoinGecko, LUNA has plummeted over 60% on the day to $11.21. It has fallen 86% in the last week and is 90% lower than its April peak.