Conversation

Do Kwon 🌕
@stablekwon
1/ The LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market concerns around UST. Some more context on why and how:
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LFG | Luna Foundation Guard
@LFG_org
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1/ 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.
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Do Kwon 🌕
@stablekwon
2/ First, *LFG is not trying to exit its bitcoin position*. The goal is to have this capital in the hands of a professional market maker such that: 1) Buy UST if price < peg 2) Buy BTC if price >= peg thus significantly strengthening the liquidity around UST peg
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Do Kwon 🌕
@stablekwon
3/ While buys and sells of UST are not meaningfully directional now, we felt it was valuable to have capital ready to be deployed in the current market. As markets recover, we plan to have the loan redeemed to us in BTC, increasing the size of our total reserves.
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Do Kwon 🌕
@stablekwon
5/ While this did not happen, allowing BTC to be redeemed against US on an onchain dex, we are just a few weeks away from a testnet launch developed by the
@astroport_fi
team. Until then, the LFG council decided to err on the side of caution.
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Do Kwon 🌕
@stablekwon
7/ This will be an important opportunity for the terra and wider crypto community to gather empirical data on how LFG operates & fits into the Terra ecosystem. Observe over the next few days not on whether LFG chose to deploy reserves, but on how.
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Danial Daychopan
@DDhopn
Does LFG have enough reserves to repeat this process and protect the peg if Bitcoin continued to crash, let’s say to sub 10k?
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C. A. D
@carlosalexander
Why take on additional counterparty risk by giving out both BTC and UST to a third party to arb the peg instead of doing it in house?