Terraform Labs has gifted 10 million LUNA ($880 million) to the Luna Foundation Guard to help boost the stability of the stablecoin UST.
The funding will likely go toward the foundation’s goal of acquiring additional collateral — so far in the form of bitcoin (BTC) and avalanche (AVAX) — to underpin UST. It may also be partially burned to help maintain UST’s peg to the US dollar.
Terraform Labs is the development firm behind the Terra blockchain and the UST stablecoin. It founded the Luna Foundation Guard, a Singapore-based non-profit, in January and tasked it with maintaining the stability of Terra’s algorithmic stablecoins and to buy all reserve assets for UST on behalf of the Terra stakeholders.
Currently LUNA, a free floating cryptocurrency that’s the native token of the Terra blockchain, is used to keep UST’s peg to the dollar. A burning mechanism is used to stop UST’s price going above a dollar. On the flip side, if it drops below the dollar, traders can arb