Amidst the tough situation that the market is going through, some digital assets seem to have the worst effects of all; Terra’s UST stablecoin is such an example
The non-profit organization of Terra network, Luna Foundation Guard or LFG, is trying hard to keep its struggling stablecoin UST back on track. The recent massive slump in the crypto market already had a huge impact, but it was not bad enough; on top of that, the third largest stablecoin collapse has acted to add fuel to the ongoing fire.
Now the non-profit organization of Singapore based Terra network is reaching out to people who are general investors in the hope of raising funds to bring the hard battling stablecoin back to a stable track again. LFG is planning to raise funds upto $1 billion to collateralize the backing of UST stablecoin as per the reports that cited the people having familiarity with the matter.
This move that came up from LFG seemed nothing like a surprise and sort of expected as the stablecoin has seen decoupling from the US dollar and went to fall below $0.70 on at least two occasions this last week. CEO and founder of Terraform Labs Do Kwon have kept failing, and the funding is pending to get confirmed. His latest post on Twitter at the time stated to stay strong as they are getting close that followed by the tweet a few hours earlier than stated to hang tight as the announcement regarding the recovery plan is close.
On the 10th of May, there were some clarifications posted by the Luna team in order to combat the heavy streams of FUD (Fear, Uncertainty and Doubt) that have overshadowed the mainstream media. The post said that if the market capitalization of UST stablecoin is greater than Terra’s Luna token that collateralized it itself, no death spiral will be there.
The post also stated that UST stablecoin is backed by the user on blockchain activities and the economy of Terra economy demand like economic activity on the network and corresponding cash flow. It also added that regaining the Peg takes time in order to do so under the given parameters, but it would bounce back. As per the dashboard of Google Analytics, almost all the reserve USD balance was used to bring stability to the stablecoin. It already had plunged from around $4 billion to almost $146 million where it stands currently.
Source: https://www.thecoinrepublic.com/2022/05/11/in-what-ways-now-luna-foundation-guard-is-seeking-to-fund-the-crash-pegging-of-ust-stablecoin/