TerraLabs sold over 80,000 BTC to rescue its stablecoin, Luna

The crypto market has experienced many bloodbaths in the past. But last week’s crash had more catastrophic effects on the market than recent bearish trends, mainly in stablecoins. UST, a stablecoin issued by Terraform Labs, is one example that shocked the cryptocurrency world when the coin crashed from $1 to $0.15 between May 9 and May 14, losing nearly 85% of its value. worth.

Later, on May 16, the Luna Foundation Guard (LFG) announced on Twitter that they had sold their Bitcoin (BTC) reserves between May 8 and 10 to rescue their stablecoin.

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It was not the first time that a crypto project collapsed. But the previous crash did not have the dire effects that the UST stablecoin suffered in the most recent bloodbath.

LFG, an organization aimed at supporting blockchain innovators developing a decentralized economy, revealed his reserves of 80,394 BTC and other digital currencies that he had as of May 7, 2022.

The Foundation reportedly began converting its assets into reserves against UST on May 8, 2018, when the price of UST fell significantly. It took these steps immediately as it is a non-profit company with the main motto of strengthening the Terra ecosystem.

Similarly, the firm explained that it quickly changed the asset by transferring the digital assets to a counterparty, which does not require short notice to allow for large transactions.

Luna’s price is currently $0.00020. | Source: LUNA/USD price chart from TradingView.com

LFG strives to keep Luna Peg

In accordance with the Master Services Agreement that was signed on January 10, 2022, TerraForm Labs (TFL), on May 10, said that it managed to execute all the necessary financial, administrative and operational tasks to support its coin when the value of Terra’s UST had decreased to $0.75.

In its desperate attempt to maintain the value of the peg, TerraLabs, relying on the LFG, had carried out the following BTC exchange among others.

“LFG sold $33,206 BTC for a total of $1,164,018,521 UST.”

speaking of the remaining 313 BTC in circulation, the Luna Foundation has announced that it plans to distribute them among the Terra community to reimburse affected users.

The LFG revealed in a tweet;

The Foundation seeks to use its remaining assets to compensate the remaining users of $us, smallest holders first. We are still debating through various distribution methods; updates to follow soon.

Suffering from the collapse, the Luna made the deepest dive on Saturday when it smelled the bottom. Subsequently, the volatile token skyrocketed and gained a whopping $720% in just 24 hours, reaching its value at $0.00040154. Likewise, Luna’s trading volume increased by 1000% after TFL restarted its block production after a 9-hour outage.

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As things stand now, it’s hard to speculate whether or not the Terra network can recover from such a huge loss. However, recent gains provide frustrated investors with momentary peace of mind. And it remains to be seen whether the token will have the potential for a full recovery.

Featured image from Pixabay and chart from TradingView.com

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