Terraform Labs Donated $1B For LUNA’s Guard Reserves: Report

Terraform Labs donated $1 billion for Luna’s Guard reserves as the high demand for UST led to a pool imbalance on Curve Finance which required intervention so let’s read further in today’s latest cryptocurrency news today.

Do Kwon, as the founder of Terraform Labs, which develops the blockchain ecosystem on TErra Luna, and the UST stablecoin, announced that Terraform labs donated $1B to the Luna Foundation Guard. It launched in January to grow the Terra ecosystem and to improve the sustainability of the stablecoins. Kwon noted that the funds denominated in LUNA will be burned to mint UST and grow the LFG reserves:

“We will keep growing reserves until it becomes mathematically impossible for idiots to claim de-peg risk for UST.”

If there is any confusion left at this point, we will keep growing reserves until it becomes mathematically impossible for idiots to claim depeg risk for $UST $UST is mighty https://t.co/6xCDPWJUTX

— Do Kwon 🌕 (@stablekwon) March 11, 2022

UST is an algorithmic stablecoin which a theoretical exchange rate of 1:1 with the US dollar and maintained by swapping for luna tokens when the market deviates from the peg. The burning of $1 in UST resulted in the minting of $1 in LUNA and also the other way around. However, because of the high demand for UST on DEFI, platforms like Curve finance resulted in unbalanced pools for swapping stablecoins. With more users swapping their USD coin and Tether for UST, the pool’s reserves will lower down and will cause strong price volatility as supply lags behind the demand. A few days ago, TFG already voted to burn 4.2 million LUNA left in the treasury to protect the UST peg:

“LFG will swap the [new] LUNA to UST (swap=burn) and sell the UST to the Curve pool. The proceeds will go back to LFG reserves to purchase BTC.”

Thanks to Terra’s flagship Anchor Protocol, UST is quite a popular coin among the crypto enthusiasts which promised up to 20% annual yield on the UST savings but because of the imbalance on the depositors and lenders and the paying interest, the Anchor Protocol reserve is on the decline at a time of publication but it experienced a massive capital infusion.

As recently reported, Crypto Twitter was wild last month after a speaker at the Messari Mainnet cryptocurrency conference in New York was served with a subpoena by an SEC representative, as witness Slava Rubin from Indiegogo noted. The reports showed that Terraform’s Do Kwon was the one that got the subpoena and according to the court filing, Do will sue the regulator over the subpoena.