The Luna Foundation Guard is backing the stablecoin TerraUSD (UST) with a bitcoin reserve. This should ensure the stablecoin's value stability and, as an additional cushion, ensure that it is crisis-proof.
Terra's declared goal is absolute dominance in the stablecoin market segment. The Bitcoin reserve is intended to provide additional coverage, but also to increase investor confidence. The latest deal was between LFG, Three Arrows Capital and Genesis Trading. A total of 1.5 billion US dollars changed hands.
What is special about the deal is that LFG exchanged 1.5 billion UST for Bitcoin. With that, LFG now holds a total of 80,394 BTC in reserve. However, critics see no security in this, because Bitcoin can also be subject to strong fluctuations. However, the additional liquidity that UST gains with the Bitcoin reserve regardless of any price fluctuations remains relevant in this context.
LFG cannot save the market
Although LUNA, the native token of the Terra blockchain, has held up relatively well, there is currently no reason for investors to be happy. At press time, LUNA is trading around $80, a long way from the $100 mark, which would need to be breached to signal a possible trend reversal.
Apparently, the LFG's confidence in Bitcoin is also not a signal that fuels investors' imaginations regarding Bitcoin. On the one hand, it is not the first purchase, on the other hand, the market reacted negatively to the Fed's decisions again yesterday with a delay.
In the end, TerraUSD still gains in importance for many investors, because a whopping 18% annual return can currently still be achieved if you invest UST in combination with the Anchor Protocol. For many, this is a sensible alternative given the dwindling strength of bitcoin and a possible looming price slide.
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