LFG to deploy $1.5 billion to bolster UST peg and build BTC reserves

LFG to deploy $1.5 billion to bolster UST peg and build BTC reserves

Leading Global Crypto Exchange, LFG has announced a new strategic plan to bolster the UST peg and build reserves. The company will make use of an undisclosed amount of newly issued shares in order to reduce its outstanding share count by almost 50%.

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The “mim-ust” is a cryptocurrency that is meant to be used as a reserve currency. It has been announced that the mim-ust will be put into use in order to build up UST reserves and bolster the peg.

LFG to deploy $1.5 billion to bolster UST peg and build BTC reserves

LFG to deploy $1.5 billion to bolster UST peg and build BTC reserves

 

The Luna Foundation Guard (LFG) is planning to deploy $1.5 billion in money to “help safeguard” Terra USD’s peg to the US dollar, despite the significant drop in Bitcoin (BTC) and the broader crypto market this week.

The Terra (LUNA) ecosystem includes the Singapore-based organization LFG, which is responsible for collateralizing the network’s algorithmic stablecoin UST and maintaining the network’s reserves.

While specifics are few at this time, the LFG said earlier today on Twitter that it would initially lend $750 million in BTC to over-the-counter (OTC) trading businesses to handle and trade the funds.

Following that, the LFG will seek a 750 million UST loan — most likely from Terraform Labs — to rebalance its reserves once the market has calmed.

The council opted to carry out the plan after noticing “substantial” market volatility in BTC, UST, and LUNA over the previous few days, according to the LFG.

As a consequence, the LFG Council has decided to carry out the following actions:

– Provide OTC trading companies with $750 million in BTC to assist safeguard the UST peg.

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– As market circumstances improve, loan 750 million UST to acquire BTC.

May 9, 2022 — LFG | Luna Foundation Guard (@LFG org)

Terraform Labs CEO Do Kwon clarified the action on Twitter, saying that “LFG is not seeking to quit its Bitcoin position” and that the funds would be used to boost UST in the near term before increasing its BTC holdings in the long run.

“We believed it was important to have cash available to deploy in the present market, even if buys and sells of UST are not materially directional right now.” We want to have the loan repaid in BTC when markets recover, boosting the amount of our entire reserves.”

1/ To ease market worries over UST, the LFG Council recently agreed to invest 1.5 billion dollars in capital (0.75 billion in BTC, 0.75 billion in UST). More information about why and how: https://t.co/TfaAPkzgUJ

May 9, 2022 — Do Kwon (@stablekwon)

Because the LFG’s $2.91 billion reserves are mostly backed by BTC (91 percent or $2.7 billion), the institution is being forced to restructure its balance sheet to preserve the UST’s peg. BTC is now trading at about $33,600, down 12.7 percent in the last seven days, while UST is marginally off its As the LFG’s $2.91 billion reserves are primarily backed by BTC (91% or $2.7 billion) the declining price of assets is forcing the entity to readjust its balance sheet to maintain UST’s peg. At the time of writing, BTC is down 12.7% over the past seven days to sit at roughly $33,600, while UST is slightly off its peg at $0.99..99 mark.

Bitcoin clings around $36K as research shows short-term holders are to blame for the price drop.

Terra’s native asset LUNA, which also contributes to UST’s peg through its burning and minting process, has lost a substantial amount of value in the last week, falling 24.5 percent to $62.15.

The “ethereum technical analysis” is a blog post that discusses the Ethereum Foundation’s decision to deploy $1.5 billion to bolster their UST peg and build BTC reserves.

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