(Twitter) The Luna Foundation Guard is seeking to lend Bitcoin and TerraUSD reserves as its algorithmic stablecoin lost peg against the US dollar.
LFG said that the stablecoin UST experienced a significant directional flow over the weekend, which was accompanied by increased volatility in the native token LUNA and BTC. It said the flow has currently stabilized, but it was necessary to prepare for future volatilities.
LFG said that UST lost its peg to the dollar after falling to $0.987 although it recovered back to $1. The volatility saw LUNA fall 10%.
The firm said that withdrawals of large quantities of UST from liquidity pools on DeFi platform Curve was to blame. Around $192 million of UST was reportedly dumped.
The firm said that it would loan $750 million in BTC holding to trading firms to defend the peg and an additional $750 million in UST to accumulate Bitcoin and normalize the market.
LFG’s founder says the move to lend out the crypto reserves should not be viewed as an attempt to exit Bitcoin position but rather, increase the UST peg liquidity. The firm says it will buy more Bitcoin if UST expands after the current move.
LUNAUSD is down -4.95%, BTCUSD is down -2.18%
