The issuer of the collapsed stablecoin TerraUSD spent 3 billion

The issuer of the collapsed stablecoin TerraUSD spent $3 billion to support it, but that didn’t help

The Luna Foundation Guard, an organization set up to maintain and ensure the stability of the notorious stablecoin TerraUSD (UST), announced that almost all of the available bitcoin reserve was used up last week to preserve the token’s value. According to the available data, LFG held more than 80,000 bitcoins, which were worth over $3 billion last week.

    Image Source: CFOTO/Future Publishing/Getty Images

Image Source: CFOTO/Future Publishing/Getty Images

Remember that TerraUSD is an algorithmic stablecoin pegged to the dollar via the Luna cryptocurrency token. Parity against the dollar is provided by the following algorithm: when the value of the coin falls below $1, additional Luna tokens are issued, which are automatically exchanged for stablecoins. This process will continue until the TerraUSD rate climbs back to $1. At the same time, the stablecoin itself is not backed by real assets, rather LFG holds a supply of bitcoins in reserve.

According to available data, LFG moved 52,189 bitcoins to “trade with a counterparty” after TerraUSD fell below $1 last week. The organization later sold another 33,206 bitcoins in a last-ditch effort to save the stablecoin from collapse. However, this did not help: TerraUSD is currently trading at $0.1.

As of Monday, only 313 bitcoins remained in the LFG reserve, worth around $9.3 million. According to the source, the organization intends to use the remaining assets, including other digital tokens, to offset the losses of some TerraUSD holders to compensate – primarily those who have this amount.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

Add Comment

Click here to post a comment