Bitcoin has fallen below $ 26,000 since December 2020. (CFOTO / Future Publishing should be read through Photo Credit Getty Images)
CFOTO | Future publications via Getty Images
Investors are curious to know that crypto firm Terra bought more than 3 billion in bitcoin to support its failed stablecoin. Now, they’ve got their answer.
The Luna Foundation Guard, a fund founded by Terra creator Do Cowan, Said Monday It spent almost all of its reserve bitcoin last week on Terra USD – or in short a failed attempt to save UST.
The foundation deposited a total of more than 80,000 bitcoins, valued at $ 3 billion last week. Kwon promised to use bitcoin in the event of a dramatic fall in the value of the UST.
In a series of tweets, the Luna Foundation Guard said it had moved 52,189 bitcoins to “trade with rivals” as UST dropped its target below $ 1. The foundation said Terra sold another 33,206 bitcoins directly in a last-ditch effort to protect the peg.
As of Monday, there were only 313 bitcoins left in the Luna Foundation Guard’s reserves, valued at about $ 9.3 million. The firm said it would use the remaining resources – including some other digital tokens, such as BNB and Snow – to “compensate the remaining users” of the UST.
“We’re still debating the various delivery methods, updates to follow soon,” said Luna Foundation Guard.
UST is known as an “algorithmic” stablecoin. Unlike Teether and USDC, who have a reserve Fiat reserve to back up their tokens, UST relies on a complex mix of codes combined with a floating token called Luna to balance supply and demand and stabilize prices.
When the UST started falling below $ 1 last week, Luna also started selling, which led to a vicious cycle of UST falling below 30 and Luna becoming worthless. UST is now only 9 cents, according to CoinGecko data.
The collapse of Terra Tokens has spread to the crypto market, wiping out more than $ 200 billion in assets in a single day. Bitcoin briefly plunged below $ 26,000 on Thursday, its lowest level since December 2020.