TerraUSD, or UST for short, has dropped far below its $1 mark. It was trading at just 9 cents on Monday.
Do Kwon, the developer of Terra, had promised to utilize bitcoin if the value of UST fell dramatically.
What Happened To The $3 Billion In Bitcoin Terra?
Investors have been curious about what happened to the $3 billion in bitcoin Terra purchased to support its failed stable coin. They’ve received their response.
The Luna Foundation Guard, a group that supports the Terra ecosystem, has revealed that they sold 80,081 bitcoin and other holding tokens to avoid the crash on May 8 and May 10.
Before the UST was de-pegged, the Luna Foundation Guard (LFG) possessed over 80K BTC and other cryptocurrencies.
The corporation sold Bitcoins for around 3 billion UST, which is today worthless due to the shutdown of the Terra blockchain.
Luna commented on Twitter:
“The Foundation began converting this reserve to UST on May 8, when the price of UST began to decline significantly below one dollar.
The Foundation accomplished so by immediately performing on-chain swaps and sending BTC to a counterparty, allowing them to enter large-scale and short-notice trades with the Foundation. Directly sold 26,281,671 USDT and 23,555,590 USDC for a total of 50,200,071 UST.
Transferred 52,189 BTC to trade with a counterparty for a total of 1,515,689,462 UST, net of an excess of 5,313 BTC that they have refunded. On May 10, when the UST was $0.75… 33,206 BTC were sold for a total of 1,164,018,521 UST.”
However, because there were no other methods or assets to sustain the stable coin UST, Luna crashed the next day.
LFG owned 80,394 Bitcoin on May 7, but as the price of $UST fell, they began converting the Bitcoin reserve to $UST.
The stable coin UST is an “algorithmic” stable coin. Unlike tether and USDC, which use a reserve of fiat assets to back their tokens, UST used a complicated combination of code and a floating token called luna to balance supply and demand and keep the price stable.
Last week, when UST began to go below $1, luna began to sell off as well, leading to a vicious cycle in which UST fell to less than 30 cents and luna became worthless. The UST is currently only worth 9 cents.
Meanwhile, Binance invested $3 million in Luna in 2018 and earned 15 million tokens in exchange. According to Binance’s CEO Changpeng Zhao, the tokens were valued at $1.6 billion at the height of Luna’s pricing in April. The tokens are currently worth $2,391 at Luna’s current price.
Despite Binance’s massive losses, Zhao stated that retail traders who lost money during Luna’s crash last week should be compensated before Binance.
And, Polygon Studios’ CEO Ryan Wyatt tweeted on Monday that Polygon is working with a number of Terra games to aid them in transitioning to the Polygon Network, which should benefit both the Polygon (MATIC) community and Terra projects.
According to Wyatt, the Polygon community is “prepared to embrace the developers and communities of these Terra projects.” Polygon would also provide the funds and resources needed to support companies in their migration, he said.
Fantom (FTM), a Layer-1 blockchain project, has also shown its support for the Terra community, claiming that it is willing to help any project or developer who wants to depart from the Terra blockchain. Fantom’s team also laid out a grant tool to support integration, marketing, and networking.