Terraform Labs Intervenes To Address UST Reserve Imbalance

• The recent spike in demand for UST has led to a pool imbalance on decentralized platforms.
• TFL has donated around 12 million LUNA, worth $1.1 billion at the time, to the Luna Foundation Guard (LFG).
• Also, TFG had recently voted to burn the 4.2 million LUNA left in its treasury to protect UST’s peg.

The recent spike in demand for UST has led to a pool imbalance on Curve Finance and other decentralized platforms, resulting in a need for intervention.

Terraform Labs CEO and Founder Do Kown announced on Friday that TFL has donated around 12 million LUNA, worth $1.1 billion at the time, to the Luna Foundation Guard (LFG).

LFG launched in January with the aim of growing the Terra ecosystem and improving the sustainability of its stablecoins. Kwon also noted that the funds, denominated in LUNA, will be burned so that UST can be minted to grow the LFG’s reserves.

UST is an algorithmic stablecoin which, theoretically, maintains a 1:1 peg with the U.S. dollar. The exchange rate between UST and USD, Terraform’s algorithm mints or ...