Terra’s Luna Foundation Guard Raises $1 Billion in Private Token Sale
- The $1 billion private LUNA sale, the largest in the history of crypto, established a Bitcoin denominated UST Forex Reserve
- Participants in the sale included Jump Crypto & Three Arrows Capital, with participation from DeFiance Capital, Republic Capital, GSR, Tribe Capital, along with others
- This is the second most significant move by the Luna Foundation Guard after it boosted the Anchor reserves by $450 million earlier this month
The Luna Foundation Guard was established as a non-profit organization to help build and promote a decentralized economy, just completed its private LUNA sale. The sale, which raised $1 billion, is the largest sale to ever occur in the crypto space.
Terra UST Forex Reserves
The purpose of the sale was to create a Bitcoin denominated forex reserve for the biggest stablecoin on the Terra chain, TerraUST.
Terra stated that the decision to develop a forex reserve for UST was taken concerning the criticism faced by algorithmic stablecoins.
Being a non-collateral stablecoin makes such coins susceptible to sudden price drops in a situation where consistent selling of the token outpaces the supply.
Terra stated that this situation is mainly hypothetical to UST, saying:
“Although the widespread adoption of $UST as a consistently stable asset through market volatility should already refute this, a decentralized Reserve can provide an additional avenue to maintain the peg in contractionary cycles that reduces the reflexivity of the system.”
Thus this $1 billion, which will be locked up for a vesting period of 4 years, will act as a release valve for UST redemption to maintain the price of the USD peg.
Terra explained that this would work so that the algorithm backing the stablecoin will maintain the supply of the tokens based on the fluctuation in price, issuing more when the price goes up and reducing when the price goes down.
Luna Foundation Guard
Established last month, the LFG has been keeping its word of prioritizing DeFi projects, particularly those which focus on the peg stability and sustainability of TerraUSD, the network’s stablecoin, with this sale.
This commit was done to maintain Anchor’s 19-20% APY, which makes it one of the most alluring projects in the DeFi lending space.
The efforts displayed by Terra are truly paying off as its native token LUNA is on a rally today. Up by 17.27%, LUNA is amongst the top five performers of the day.
This rally also flipped the ongoing downtrend into an uptrend which is visible on the charts as the indicator has moved below the candlesticks.
If the rally sustains, LUNA could soon end up breaching $60.