The Luna Foundation Guard, the custodian of Terra’s Bitcoin reserves, has deployed 28,205 BTC to defend the peg of the protocol’s UST stablecoin, which saw its value plunge to a $0.61 low amid ongoing market turmoil.
The funds are set to provide liquidity on exchanges and led to a modest recovery in UST’s price, which surged from its $0.61 low to $0.94 before falling again. At the time of writing, the stablecoin is trading at $0.888.
The price of the flagship cryptocurrency tanked around 10% on Monday alone as UST’s believers and detractors alike pondered how much the Luna Foundation Guard’s deployment exacerbated the ongoing bitcoin sell-off.
The stablecoin lost its peg after more than $500 million was sold by large investors on Terra’s leading savings protocol Anchor, which offers rates near to 20% for those depositing UST. 75% of circulating UST was deposited to Anchor last week, but deposits on the platform have now plunged from $14 billion to around $7 billion.
The price of LUNA, a token used to maintain UST’s peg by allowing traders to swap $1 worth of UST for $1 of LUNA, plunged by around 40% and is now trading at $30. The cryptocurrency hit an all-time high near $120 in early April.