On Friday, Do Kwon, founder and CEO of Terraform Labs, which develops the Terra Luna (LUNA) and TerraUSD (UST) stablecoin blockchain ecosystem, announced that TFL has donated 12 million LUNA, or $1.1 billion, as of press time. . . To protect the Luna Foundation (LFG). LFG was launched in January to expand Terra’s ecosystem and increase the sustainability of its stacked coins. Kwon noted that LUNA resident funds will be burned to characterize the ground tanks to boost LFG’s inventory:
“We will continue to build reserves until it is mathematically impossible for idiots to demand the elimination of the dangers of terrestrial reservoirs.”
UST is a computationally stable currency with a theoretical exchange rate of 1:1 in US dollars and is backed in part by exchanges / LUNA tokens when the market value deviates from the bond. A dollar burn in floor cabinets results in a dollar in a LUNA and vice versa.
However, due to the high demand for terrestrial treasuries on decentralized finance (DeFi) platforms such as Curve Finance, this causes the stablecoin pools to become unbalanced. For example, as more and more crypto enthusiasts exchange their US dollars (USDC) and Tether (USDT) for UST, the pool’s reserves will be depleted, causing prices to fluctuate as supply depends on demand. Two days earlier, the Transitional Federal Government had already voted to incinerate the remaining 4.2 million LUNAs in the Treasury to protect the Archdiocese of the Earth Treasury. According to TFG:
“LFG will exchange LUNA for UST (exchange = burn) and sell UST to the Curve pool. Proceeds will go back to LFG’s reserves for the purchase of BTC.”
Thanks to Terra’s pioneering Anchor protocol, UST is a very popular coin among crypto enthusiasts and promises an annual return of up to 20% on UST savings deposits. However, due to the imbalance between savers and interest-paying lenders, the Anchor Protocol’s reserve (to pay off promised returns) continues to decline at the time of this publication, although it has recently received a massive infusion of capital.