Luna Foundation Guard (LFG) to loan $1.5B in Bitcoin (BTC) and TerraUSD(UST) to protect the peg of its stablecoin to the US dollar.
1/ The LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market concerns around UST. Some more context on why and how: https://t.co/TfaAPkzgUJ
— Do Kwon 🌕 (@stablekwon) May 9, 2022
BTCUSD down -2.96%, ETHUSD down -4.61%
The Singapore-based LFG stated it would lend $750M of BTC to trading companies to help protect the peg and also lend $750M in UST to accumulate Bitcoin to stabilize the market.
LFG stated that the traders would trade on both sides of the markets to maintain the parity of the LFG Reserve pool as market conditions stabilize.
UST depends on another token, LUNA, to maintain its price of the dollar through a set of on-chain mint and burn processes and is one of the biggest algorithmic stablecoin.
Do Kwon founder of LFG stated that the move to lend out $750M of BTC should be observed as LFG moving to exit its BTC position but expanding the liquidity around the UST peg.