Luna Foundation Guard (LFG) will lend out $1.5B worth of BTC and stablecoin UST

Luna Foundation Guard (LFG) says it will lend Bitcoin and stablecoin UST hundreds of millions of dollars to protect future rates amid volatile market conditions.

Luna Foundation Guard says it will lend out $1.5 billion in BTC and UST to defend the stablecoin peg

UST — the algorithmic co-stable tied to the Terra cryptocurrency ecosystem — has dipped below its expected $1 equivalent, though it has recovered since Saturday’s low. At press time, UST is trading at $0.9955 against USDT on Binance.

In a tweet thread, the LFG said that it “will proactively defend the stability of the $UST peg & broader Terra economy, especially under volatility and the uncertainty of macro conditions in legacy markets.”

“The traders will trade the capital on both sides of the market to help accomplish both #1 and #2, eventually maintaining parity of the LFG Reserve pool (denominated in BTC) as market conditions progressively stabilize,” the thread went on to explain.

LFG’s board of directors includes Terraform Labs co-founder Do Kwon, Terraform Labs head of research Nicholas Platias, and Jump Crypto president Kanav Kariya, among others.

The Singapore-based nonprofit group was formed in January to support the Terra ecosystem as well as the “sustainability and stability of Terra’s algorithmic stablecoins,” according to an announcement post at that moment.

In February, LFG raised $1 billion to build a bitcoin-based reserve that will serve as a support mechanism for the UST peg. As of earlier this week, LFG held more than $3 billion in BTC in its reserves.

In a subsequent tweet thread posted after the publication of this report, Kwon wrote that “[w]hile buys and sells of UST are not meaningfully directional now, we felt it was valuable to have capital ready to be deployed in the current market.”

“As markets recover, we plan to have the loan redeemed to us in BTC, increasing the size of our total reserves,” he continued.

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