Foundation Focused on UST Stablecoin Raises $1B in LUNA Sale
Singapore-based Luna Foundation Guard (LFG), a nonprofit organization supporting the growth of the Terra ecosystem, has raised $1 billion through the sale of LUNA, the native token of the Terra blockchain.
The funding will go toward building a bitcoin-denominated foreign-exchange reserve for UST, an algorithmic-based stablecoin in the Terra ecosystem, according to a statement.
The funding round, which ranks among the largest in crypto history, was led by Jump Crypto and Three Arrows Capital, with participation from DeFiance Capital, Republic Capital, GSR Ventures and Tribe Capital, among others.
According to Luna Foundation Guard, the UST Forex Reserve aims to strengthen and protect the peg of the UST stablecoin, which is algorithmic-based, meaning that it relies on market incentives as opposed to being backed by collateral to maintain its price, like Tether and Circle are.
“Although the widespread adoption of UST as a consistently stable asset through market volatility should already refute this, a decentralized Reserve can provide an additional avenue to maintain the peg in contractionary cycles that reduces the reflexivity of the system,” Terra wrote in a tweet.
Terra has set tongues wagging recently. Earlier this month, the Terra network spent $40 million on a sponsorship for the Washington Nationals baseball team. And last week, a U.S. District Court judge in New York orders Terraform Labs and CEO Do Kwon to comply with subpoenas that the U.S. Securities and Exchange Commission had issued.
The price of LUNA was up 3.5% over the past 12 hours, outperforming the otherwise red-dominated crypto market on Tuesday.
The news was earlier reported by The Block.
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Helene is a U.S. markets reporter at CoinDesk, covering US economics, stablecoins, and Wall Street. She is a recent graduate of New York University's business and economic reporting program.
