The Luna Foundation Tried To Help Terra With Billions Of Bitcoin

Screen image showing a luna and terra symbol with graphs showing the price breakdown.

You could probably call it a “luna eclipse,” but maybe only in reference to a celestial body that suddenly ceases to exist.
picture: Maurice Norbert (stock struggle)

As a child, I remember when my father tried to use a broom handle in one last attempt to prop up a roof that was collapsing from the weight of nearly three feet of snow. You can guess how well it went. In a similar vein, Terra Blockchain reportedly spent $3.5 billion to prevent the roof from collapsing on itself. We now see how much a popular cryptocurrency costs due to a faulty broom handle.

The non-profit Luna Foundation Guard, which oversees and supports the TerraUSD stablecoin and its Luna native coin, said in Twitter statement On Monday, he said that on May 7 he had more than 80,000 bitcoins in his wallet along with several thousand other different coins. The reserve is built to support Terra if it drops below $1. distance TerraUSD started faltering on May 8LFG reported it loaned And trade She has several thousand reserve coins to maintain the link she had in her stablecoin.

A stablecoin system like TerraUSD is pegged to a currency, which in this case was the US dollar, to provide financial security. One TerraUSD was worth one dollar, but unlike other stablecoins, Terra was algorithmically installed rather than backed by assets, and worked with its sister currency Luna in a kind of closed ecosystem to support each other to keep the coin price in. However, Terra started faltering over the weekend of May 8th, who in the end It made people sell out Luna in droves, causing a death spiral for both symbols. TerraUSD is now trading at 9 cents to the dollar.

After rushing to trade its reserves last week, LFG said it had only 313 bitcoins left, along with other currencies. It has 222,700,000 luna coins in Reserves Also, although the vast majority are currently restricted to validators, which means they are used to support the Terra blockchain that uses a proof of stake model. LFG stated that Luna is not related and must be returned to enthusiasts within 20 days.

Researchers at Bloc It estimated that the corporation had gone from $3.1 billion in reserves to just $87 million. Meanwhile, the foundation said that it is compensating TerraUSD users with the remaining coins starting with the smallest holders first.

The plots have been on the move from the starting gun after the collapse of the stablecoin price last week. Some users unfoundedly claimed that the Foundation and Terra were supporting “whales”, AKA the largest holders of Luna and Terra, first. LFG denied this.

He was the founder of Tira Do Kwon said earlier They will provide documentation of the use of the reserves, but LFG’s latest tweets leave many questions unanswered. CoinDesk Reports Some Skeptical Analysts Confused Over Too Much Bitcoin It ended up on major crypto exchanges Gemini and Binancealthough it is difficult to determine what happened to the coins after that.

What Luna likely did not help prop himself up was the rapid drop in the price of almost all cryptocurrencies at that time, including bitcoin. CNBC Last Thursday, it reported that Bitcoin reached price levels not seen in over a year, and that investors lost a total of $200 billion during the rapid sell-off. Ether, the second largest cryptocurrency after Bitcoin, is struggling to keep trading above $2,000, compared to when it was above $4,400 at the end of 2021.

The fall of Luna and other cryptocurrencies in the past two weeks has had regulatory hounds ready to pounce. International Organization of Securities Commissions Consider bringing a central regulatory body What was traditionally called decentralized finance.

This post was updated on May 16 at 5:15 to modify the name of the stablecoin.

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