The Luna Foundation Guard saw its Bitcoin reserves take a massive hit following the UST stablecoin’s price plunge.
Following the crash of controversial stablecoin UST, the Luna Foundation Guard (LFG) now has only 313 Bitcoin (BTC) left in its reserves. This came about after the Luna Foundation Guard disbursed millions of dollars worth of crypto in a futile attempt to maintain the UST dollar peg. As Terra tried to save UST, it ended up depleting $3 billion worth of the assets in the LFG reserves. This depletion also marks an even more significant loss in just a week, considering the value now stands at $87 million.
Luna Foundation Guard on UST-Precipitated Bitcoin-Reserve Depletion
The official Luna Foundation Guard’s Twitter issued a statement documenting its position on May 7th:
“As of Saturday, May 7, 2022, the Luna Foundation Guard held a reserve consisting of the following assets: · 80,394 $BTC · 39,914 $BNB · 26,281,671 $USDT · 23,555,590 $USDC · 1,973,554 $AVAX · 697,344 $UST · 1,691,261 $LUNA.”
The Luna Foundation Guard further explained how it began reacting to the UST collapse, which started the next day. According to the Singapore-based non-profit, it began converting its BTC reserves to UST due to the stablecoin price decline. The Foundation achieved this by “executing on-chain swaps and transferring $BTC to a counterparty to enable them to enter trades with the Foundation in large size & on short notice.”
The thread, which provided a detailed breakdown of the disbursement, went on to further state that the Luna Foundation Guard:
“Directly sold 26,281,671 $USDT & 23,555,590 $USDC for an aggregate 50,200,071 $UST. Transferred 52,189 $BTC to trade with a counterparty, net of an excess of 5,313 $BTC that they have returned, for an aggregate 1,515,689,462 $UST.”
This resulted in the Foundation’s BTC reserves depleting from 80,000 BTC (over $3 billion) to 313 units of Bitcoin. Currently, the non-profit trust will now apparently use its remaining assets, mainly comprising the crashed UST, to compensate investors.
The Luna Foundation will begin the compensation process with its smallest holders first. Additionally, it is worth noting that LFG’s devalued asset cache includes UST sister token LUNA, which has lost $40 billion in value. Its unit value is now only $0.002.
Terra Hardfork?
Following the UST and LUNA crash, Terra halted its blockchain production for two hours on Friday, resumed, and then suspended operations again. Terra suspended production to preempt any possible attacks, especially from whales looking to exploit the prices for control. The lingering Terra problem has caused industry players to suggest a possible Terra hardfork.
CEO of blockchain company DSRV, Jiyun Kim, has said that the Terra chain should “permanently vanish”. According to Kim, the way to save the network is a new chain directly driven by the community. However, Binance CEO Changpeng Zhao does not think that is a good idea for Terra.
“This won’t work. Forking does not give the new fork any value. That’s wishful thinking. One cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges),” explained CZ.
next
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Source: https://www.coinspeaker.com/luna-loses-80000-bitcoin/