The non-profit organization Luna Foundation Guard has announced the successful completion of a closed sale of $1 billion LUNA tokens. The funds will be used as a reserve for the UST stablecoin.
Venture capital firms such as Jump Crypto, Three Arrows Capital, GSR, Tribe Capital, and others have participated in the token sale. According to statement, the money received will be converted into bitcoins and used as a reserve fund for the algorithmic stablecoin UST, which is used in the Terra ecosystem. The choice of bitcoin as an asset for storing reserves is dictated by the fact that the first cryptocurrency “weakly correlates with the Terra ecosystem.”
“Algorithmic stablecoins are often criticized because of the possibility of a “default” when the amount of sell orders exceeds reserves. While the widespread adoption of the UST stablecoin even during market volatility refutes these claims, the decentralized reserve may provide additional opportunities during cycles of UST depletion,” the developers note.
Recall that in October last year, the Columbus-5 update was activated in the Terra network, which includes a model of deflationary pressure on LUNA and increases the compatibility of Terra with other blockchains.
Source: Bits
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