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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.