• LFG exchanged over 80,000 BTC for $UST shortly after Stablecoin lost its peg

  • On May 16, Wu Blockchain stated that the LFG now has only 313 BTC in reserve. The statement came after LFG stated that they converted the majority of their reserves on the 8th, when UST began to lose its peg.

    LFG now controls 313BTC.

    According to Wu Blockchain’s tweet,

    “LFG revealed the whole process of using the reserve BTC, the original 80,394 BTC is currently only 313BTC left: Beginning on May 8, when the price of UST began to drop substantially below one dollar, the Foundation began converting this reserve to UST.”

    Earlier in the day, the Luna Foundation Guard indicated how much reserves they had for UST in a Twitter thread. The LFG stated in a tweet that as of Saturday, May 7th, they have a reserve of more than 80,394BTC, 39,914 BNB, 26,281,671 $USDT, 1,973,555 $AVAX, 1,691,261 $LUNA, 23,555,590 $USDC, and 697,344 $UST.

    However, after exchanging over 80,000 BTC, the LFG now only has 313 BTC. Wu Blockchain stated that LFG transferred the majority of its BTC reserves into UST in order to return the stablecoin to its $1 peg. They converted the assets by doing on-chain swaps directly.

    Other Reserves Updates

    LFG mentioned that they transferred and exchanged various other assets while posting about the BTC quantities kept. LFG directly sold 23,555,590 $USDC and 26,281,671 $USDT for a total of 50,200,071 $UST. LFG additionally transmitted about 52,189 $BTC for trading with a counterparty, net of an excess of 5,313 $BTC “returned,” for a total of 1,515,689,462 $UST.

    According to the LFG thread, they signed a master’s services agreement on January 10th, allowing them to execute some exchange trades in the event of a crisis. To protect against governance attacks, the sold BTC exchanged around 880 million UST for LUNA.

    The LFG reserve now has “313 $BTC 39,914 $BNB 1,973,554 $AVAX 1,847,079,725 $UST 222,713,007 $LUNA.” While the majority of these assets are currently in other wallets, LFG stated that the reserves would be returned to their proper location. The staked Luna is currently unbonding and will be returned to the original in a few days.

    The remaining assets in the reserves, according to the Twitter thread, will be utilized to pay tiny UST holders. They are presently considering potential distribution techniques; updates will be provided as soon as possible.

    Terra and LFG

    The recent issues with the UST algorithmic stablecoin have had a significant influence on the Terra ecosystem, resulting in the blockchain being halted. Following the huge volatility, Luna was delisted for hours on multiple exchanges. However, the coin has been reintroduced on various exchanges, including Binance.

    While the crypto market appears to be stabilizing, LUNA and UST are still trading far below their historical levels. This link between BTC and UST caused several issues for the former when the latter lost its peg.

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