The Luna Foundation Guard (LFG) has announced a plan to burn 4 million Terra (LUNA) coins — currently worth $365 million — to mint about 372 million TerraUSD (UST), which will be used to purchase “exogenous collateral.”
Established as a non-profit in January, LFG recently sold $1 billion worth of LUNA to acquire bitcoin as reserve backing for the TerraUSD (UST) stablecoin.
According to LFG, once the burn is complete, the Foundation will hold about $2.2 billion in non-LUNA reserves while still holding 8 million Terra coins for future growth.
These reserves provide reserve backing for UST, which is Terra’s biggest stablecoin. This backing is to ensure that UST can maintain its US dollar peg even in times of massive selloffs in the crypto market.
Before the establishment of the asset reserves, UST’s peg was maintained solely by a LUNA burning mechanism where $1 worth of LUNA would be burned to mint $1 worth of UST.
Betting on Terra’s future
There are fears, however, that
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