Terra, one of the top 10 cryptocurrency projects by market cap, has reached a UST-related milestone recently. The Luna Foundation Guard (LFG), a nonprofit organization, reported that the protocol had reached the maximum daily issuance of its flagship stablecoin, UST. This is due to high demand that interested parties are showing in minting the asset.
Terra UST Emission Reaches Upper Bound
The Terra protocol is experiencing a marked increase in the number of UST emissions. According to the Luna Foundation Guard, an organization designed to support the Terra ecosystem and stabilize the value of its assets, the protocol has hit UST’s issuance spike for several days due to increased demand for the decentralized, dollar-pegged stablecoin.
The Luna Foundation Guard declared that people wanting to get their hands on UST were going to secondary markets. It explained:
As a result, people turned to the curve pool to get their UST, which unbalanced the curve pool.
Curve is a decentralized finance protocol that specializes in trading stablecoins and pegged tokens with almost no slippage. The foundation decided to act directly to rebalance the pool using its own funds.
Focused on Bitcoin
The Luna Foundation Guard explained that the method it would use to achieve this rebalancing would be the exchange of 5 million LUNA into UST, which would be injected directly into the liquidity pool. This action was decided by the organisation’s board of directors, with the transactions expected to take place over the next two weeks.
In addition, the foundation clarified that the proceeds of this swap would be used to purchase more bitcoin in order to grow the reserve the organization maintains to stabilize the value of UST in case of market imbalances. This reserve, called the decentralized forex reserve, was announced February 23, with a $1 billion token sale that was led by VC companies like Jump Crypto & Three Arrows Capital, Defiance Capital, Republic Capital, GSR, and Tribe Capital.
Do Kwon, co-founder of Terraform Labs, expressed his support for this move to secure the US dollar peg. Kwon has recently reinforced its commitment, indicating:
The Terra Protocol will be one of the largest holders of BTC.
UST’s market capitalization has exploded in the past 30 days from $11.3 billion to $13.7 billion, according to figures from Coingecko.
