Terra Plans $750M Bitcoin “Loan” To Market Makers To Defend UST Peg

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The Luna Foundation Guard (LFG) plans to loan $750 million from Bitcoin BTC/USD to market makers as part of a broader strategy to protect the UST stablecoin peg.

What happened: the Earth LUNA/USD the blockchain stablecoin TerraUSD USD/USD briefly lost its peg to the U.S. dollar on Saturday in what the community described as a “coordinated attack.”

The events of the weekend prompted the LFG Consulting find a way to tackle the problem.

The blockchain said it plans to lend $750 million worth of BTC to OTC trading firms to protect the UST peg and lend $750 million UST to accumulate BTC as conditions normalize.

Market participants interpreted the announcement as a way to save face and justify selling Bitcoin. For context, Terra has been steadily acquiring BTC for its reserves over the past month to turn its UST algorithmic stablecoin into one that is backed by Bitcoin.

Founder of Terra Do Kwon confirmed that the transaction had been sent and said that the blockchain planned to “eventually redeem this whole clip in bitcoin.”

Price action: According to data from BenzingaProBTC was trading down 3.28% at $33,400, while LUNA was trading down 5.6% at $61.50.

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