LFG Poised to Maintain TerraUSD (UST) $1 Peg as the Organization Reportedly Raises Additional $2 Billion

Terra is doing everything possible to win back investors’ trust in a bid to bolster the value of its stablecoin back to the $1.00 peg.

The Luna Foundation Guard (LFG), the nonprofit organization responsible for ensuring that TerraUSD (UST) maintains its $1.00 peg, has been doing everything to ensure the stablecoin regains its $1 peg after losing its value twice in three days.

According to Coingecko data, the popular stablecoin, which attracted lots of attention due to its adoption of Bitcoin (BTC) as a reserve backing, lost its $1.00 peg yesterday, after the stablecoin fell to a low of $0.66 following investors’ loss of confidence in the project.

Unlike other stablecoins, UST has been largely unstable in the last 24 hours, with its price fluctuating alongside other cryptocurrencies like Bitcoin, Ethereum, Ripple, etc.

Terra Trying to Regain Investors’ Trust

For the most part, there has been a lack of confidence from investors in Terra’s UST backing in recent times. However, to dismiss these fears, the LFG proceeded to announce that it has added another $1.5 billion worth of Bitcoin to its reserve to further provide backing for the stable coin and to maintain its $1.00 dollar peg.

In a bid to mitigate any further losses on the value of the UST, the LFG via Do Kwon, the co-founder of Terra, announced that the nonprofit organization would loan out $1.5 billion to exchanges, which will be allocated in UST and Bitcoin.

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

Despite these efforts, UST still slumped to a low of $0.98 yesterday. Meanwhile, LFG is still working round the clock to provide damage control for the stablecoin and possibly win back the trust of investors in the coming days or weeks.

Terra Reportedly Raises $2 Billion

Larry Cermak, director of research at The Block, tweeted earlier today that the LFG has reportedly raised an additional $2 billion from investors, to further protect the UST $1.00 dollar peg.

Cermak noted that rumor has it that the LFG is raising $2 billion from investors such as Jump, Alameda Research, and a host of many others.

There is a rumor spreading about Jump, Alameda, etc. providing another $2B to “bail out” UST. Whether this rumor is true or not, it makes perfect sense for them to spread. The biggest question here is, even if they can get it to $1 by some miracle, the trust is irreversibly gone

— Larry Cermak (@lawmaster) May 10, 2022

However, while he did not feel the need to back or dismiss the report, Cermak noted that if by chance the LFG is able to bolster the value of UST to the $1.00 peg, investors’ trust in the project is already gone.

“I personally think the only way to save it now is by fully (or potentially very close to fully) collateralizing. Otherwise, I don’t see it ever being used again,” Cermak added.

Terra and LUNA Performance

It is noteworthy that at the time of writing, the stablecoin is currently trading around $0.92, down nearly 10% in the last 24 hours, after falling to a low of $0.66.

The dip of UST also affected $LUNA, the native cryptocurrency of the Terra blockchain, which has been on a free fall since yesterday.

LUNA has seen its value dip from a high of $69 to a low of $24 in the last 24 hours. At press time, LUNA is trading around $34 across major exchanges, representing a downtrend of 52.4% in the past day.

Meanwhile, the world’s largest cryptocurrency exchange by market capitalization announced earlier today that it has temporarily suspended the withdrawal of LUNA, following a surge in the number of withdrawal requests the exchange has received in the past 24 hours.