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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

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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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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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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4/ We had hoped that the onchain bitcoin reserve system would be live by the time the Terra economy would contract, thereby obviating the need for LFG discretionary intervention Spec here:

agora.terra.money

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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

team. Until then, the LFG council decided to err on the side of caution.

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6/ The LFG council currently consists of

and myself, and we made this decision via an unanimous vote of the council.

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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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8/ I'll be hanging around this thread to answer any questions people may have.

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@ThinkingBitmex

Don't you think you're being gamed here - Buying at far higher prices, then being forced to offload at far lower prices? What makes you think over time these reserves won't dwindle as you continue to benchmark against a spec asset such as BTC?

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@ThinkingBitmex

Well we minted UST with Luna, where the average price was $100 for the mint We bought bitcoin with it at average price of ~$41k or so Think it was not a bad trade?

5:55 AM · May 9, 2022Twitter Web App

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@ThinkingBitmex

So you are just milking your protocol liquidity?

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@cryptochriscman

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@ThinkingBitmex

are you cia?

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@ThinkingBitmex

Pour one out for $LUNA homies you say'in?

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@ThinkingBitmex

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Why not just buy tether or a basket of stables to backstop the UST price? You're backstopping a pegged asset with an unpegged speculative asset, and the point is that these systemic risks often play out at the same time that your speculative asset is at depressed prices

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Because he thinks he's as smart as the FED.

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@ThinkingBitmex

sell the Avax instead sir

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@ThinkingBitmex

That you

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@cashforfirsthy1

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@ThinkingBitmex

sry but if you assume at these world events, that the time of your purchase was right - I think you partners don’t to it right…..maybe better you ask alameda

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OTC desks bought in the market i believe Bitcoin is more liquid than you know, trades this size doesn't move markets

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