Few crypto investors will have noticed that Terra (LUNA) and its associated stablecoin UST have completely collapsed during the past two days. In less than 24 hours, the price of LUNA has plunged by about 90% and UST, a stablecoin, is also very far under water. The Luna Foundation Guard is currently doing everything it can to restore order, but it seems to be mopping with the tap open at the moment.
Luna Foundation Guard
In the wake of the chaos surrounding Terra, the non-profit organization behind the project, the Luna Foundation Guard (LFG), has been trying to reassure investors and find solutions to the major problems that are now at play. This is how it tries to at least $1 billion to collect as collateral for the UST stablecoin to use.
This in the hope that thepeg”, or the fact that UST will be worth $1 again. At the time of writing, the value of UST is only $0.42! The peg to the US dollar was already lost earlier this week, but last night and this morning the UST exchange rate, and with it that of LUNA, completely collapsed.
Terraform Labs founder and CEO, Do Kwon, has been sharing information on Twitter about the worrying situation. Although a clear plan has not yet been announced, Kwon says he and his team are doing everything they can to get the Terra project back on track. Whether that will work remains to be seen, of course.
Getting close… stay strong, lunatics
— Do Kwon 🌕 (@stablekwon) May 10, 2022
Before the disaster broke out, the Luna Foundation Guard had built up a reserve worth about $4 billion. This reserve would be used to ensure the peg of the UST stablecoin at all times.
Meanwhile, however, the Luna Foundation Guard has already released almost this entire reserve. The balance of this reserve dropped from over $4 billion to just over $100 million in a short space of time. This while UST has still lost almost 60% in value against the dollar. So not a nice situation.