The Luna Foundation Guard (LFG) board plans to provide a $1.5 billion loan to OTC traders to peg the algorithmic stablecoin TerraUSD (UST) to the dollar amid market volatility.
As the organization said:
"Over the past several days, market volatility across crypto assets has been significant. The market turmoil is also reflected by the past week's uncertain macro conditions across legacy asset classes."
Over the past weekend, the UST briefly lost its parity with the dollar. This happened in the context of a large outflow of funds from the Anchor protocol.
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The LFG has said:
"UST has experienced notable directional flow over the weekend, accompanied by similar volatility in both LUNA and BTC. While this flow has currently evened out, it is prudent to prepare for potential future volatility."
Now, in order to protect the "stability of UST and the Terra ecosystem as a whole," the LFG board has decided to provide OTC firms with $750 million in BTC and $750 million in stablecoin loans.