The Luna Foundation Guard (LFG) has been fighting to save its embattled UST stablecoin, which has yet again fallen out of favor with the dollar.
If the enormous crypto market crash wasn’t horrible enough, the collapse of the world’s third-largest stablecoin ecosystem has just added to the flames.
The Luna Foundation Guard, a Singapore-based non-profit that maintains the Terra network, has been reaching out to investors in the hopes of obtaining funding to save the beleaguered stablecoin.
According to The Block, which claims “those acquainted with the subject,” the LFG is aiming to raise more than $1 billion to collateralize the UST stablecoin.
The development is unsurprising given that the stablecoin has decoupled from the US dollar, falling below $0.70 twice this week.
Luna suffers as UST crashes for the second time
Kwon Do, the founder and CEO of Terraform Labs has remained silent about the debacle, and the financing has yet to be confirmed. To say the least, his most recent Twitter message at the time of writing was cryptic:
This comes after a tweet from a few hours ago that stated, “Close to unveiling a $UST recovery plan.” “Hold on tight.”
On May 10, the Luna team issued some explanations in response to the flood of misinformation that has swept the mainstream media. There will be no “death spiral” if the UST market capitalization exceeds that of LUNA, the token that serves as collateral.
It also noted that user on-chain activities and Terra economy demand, such as network economic activity and accompanying cash flow, support UST. “Peg recovering takes time due to the restrictions,” it said, “but it bounces back.”
According to a Google analytics dashboard, the stablecoin was backed up with virtually all of the USD reserve value. It has dropped from about $4 billion to roughly $146 million where it is now.
On May 10, the stablecoin returned to moreover 90% of a dollar, but on May 11, it took another downward dip. According to CoinGecko, UST just plummeted for the second time, hitting $0.4436.