Non-profit organization Terra Labs, LFG, looks over the stability of its stablecoin and has managed its bitcoin count while retaining the balanced digital assets.
Luna Foundation Guard and lead of Terra network Do Kwon announced a ‘lend’ which will be available to market makers that will be designed to defend the stablecoin backing. LFG of Terra Labs is responsible for the UST stablecoin stability of the Terra network. While there were no specific details mentioned by Do Kwon about what would happen with the funds that will be provided, it is more likely to happen that the ‘lend’ to the market makers looks like a large-scale sell order. The organization will use the capital generated from buying the UST stablecoins back that lost their backing or peg value for a certain time on the weekend.
Members of Terra Community expressed their frustration about the situation that grew and emerged around the stablecoin. LFG has managed the transaction of about $1.5 billion of its total holdings of Bitcoin, which necessarily amounts to more than half of the total collateral straight to the bottom of the market that primarily does not need additional selling pressure.
However, other users made accusations against Do Kwon for leaking the lack of transparency at the time of deciding to make an impact on all the UST holders and demanded from him more information and further explanation regarding the same. But the Terra co-founder argued that speed is the key during the situations that were witnessed the day before; along with that, he decided this by keeping in mind the interest of the UST holders and the foundation.
Amidst the ups and downs that the market is going through and a rapid drop in bitcoin price, the emergency of panic in the cryptocurrency market followed along while causing a huge outflow of UST stablecoin liquidity which then would lead to removing pegging and the stablecoin price dipped to move below $1.
Bitcoin plunged below $33,563 on the 8th of May, which was expected by Peter Schiff, like bitcoin bears who were expecting the market turmoil to worsen if the top cryptocurrency plunges below the mark of $35K somehow.
Source: https://www.thecoinrepublic.com/2022/05/09/why-does-luna-foundation-guard-sell-its-bitcoin-worth-1-5-billion-for-a-trading-price-of-33k/