The Luna Foundation Guard (LFG), stewards of Terra’s UST stablecoin, are looking to raise over $1 billion.
Jump, Celsius, Jane Street and (perhaps) Alameda are reportedly in talks for a deal that will allow them to purchase LUNA, Terra's token, at a 50% discount. The tokens would be subject to a one-year lockup and vest monthly in year two, according to The Block. The firms did not immediately respond to CoinDesk's request for comment.
LFG did not comment on the funding round when reached by CoinDesk. Earlier Tuesday, Do Kwon, the founder of Terra creators Terraform Labs, tweeted: “Close to announcing a recovery plan for $UST. Hang tight.”
UST uses blockchain-based mint and burn mechanisms to, in theory, keep its price at exactly $1. It uses LUNA as a sort of shock absorber for UST volatility by guaranteeing that 1 UST can always be swapped for $1 in LUNA, which has a floating price.
When UST fell as low as 60 cents on Monday, it sent shockwaves through the entire decentralized finance (DeFi) industry, even sparking comments from U.S. Treasury Secretary Janet Yellen on the risks of crypto stablecoin bank runs.
With the help of professional market makers, the reserves appear to have successfully lifted the price of UST back up to 92 cents at press time. This was a major boost from Monday’s lows, but it doesn’t count as a full recovery given UST remains below its dollar peg.
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