Terra Claims LUNA Token Sale Raised $1 Billion For BTC Reserve

Terra claims LUNA token sale was performed to raise $1 billion for the BTC reserve while Jump Crypto and Three Arrows Capital bought a huge chunk of LUNA tokens as we can see more in our latest cryptocurrency news.

The LUNA foundation guard which is a nonprofit organization linked to Terra claims that it has raised $1 billion in a private token sale and it says the money will be used for a UST Forex Reserve Denominated in BTC. UST is a stablecoin that uses Terra’s LUNA to maintain its peg and there has been a lot of money that entered into crypto recently with $100 million funding rounds becoming a common thing. A recent over-the-counter token sale however took it to another level.

1/ The long awaited [REDACTED] 💎3 is here!

📣 The Luna Foundation Guard (LFG) has closed a $1 billion private token sale to establish a decentralized $UST Forex Reserve denominated in $BTC! 📣

🧵👇

— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) February 22, 2022

Terra claims LUNA token sale was used to raise $1 billion for BTC reserves led by Three Arrows Capital and Jump Crypto which is a trading platform that made Solana cross-chain bridge Wormhole whole after the recent attack. The foundation wasn’t really clear about the specifics of the raise including whether the funds were raised In BTC directly but given the market downturn, the value of the raise could be less than $1 billion depending on when it happened.

LFG will use the funds to create what it calls a UST Forex Reserve and to understand why you would have to understand a bit about the Terra ecosystem that includes both the native token and the fiat-based stabelcoin. TerraUSD is not really backed by greenbacks but rather is tied to LUNA. Whenever someone mints UST they have to burn LUNA and a while tokenomics structure is actually designed to keep the price steady. If the price of UST drops below $1 the users can purchase that UST at a discount. The arbitrage play means that the UST gets burning and brings the stablecoin price back to normal.

Stablecoins are not backed by fiat and those have lost their peg before when the algorithms haven’t matched up with the short-term needs of traders as well the case with Iron Finance last June. The foundation wrote in a press release:

“One of the common criticisms of algorithmic stablecoins is their reflexive nature during extreme volatility, where the arbitrage incentives to bring the peg back to parity can potentially deteriorate The UST Forex Reserve provides an additional avenue to maintain the stability of the peg in contractionary cycles that reduces the reflexivity of the system.”