Terra launches $1 billion bitcoin "stabilization fund"
Luna Foundation Guard, a nonprofit organization, announced the successful completion of a $1 billion private sale of LUNA tokens. The funds will be used as a reserve for the UST steblecoin.
Venture capital firms such as Jump Crypto, Three Arrows Capital, GSR, Tribe Capital and others participated in the token sale. According to the announcement, the money received will be converted into bitcoins and used as a reserve fund for the UST algorithmic stackablecoin, which is used in the Terra ecosystem. The choice of bitcoin as an asset to hold reserves is dictated by the fact that the first cryptocurrency "loosely correlates with the Terra ecosystem."
"Algorithmic Stablecoins are often criticized because of the possibility of "default" when the amount of sell orders exceeds reserves. A decentralized reserve can provide additional opportunities during UST drawdown cycles," the developers note.
