Terra Ecosystem announces Luna Foundation Guard to protect its stablecoins from volatility

Terraform Labs, the company behind the Terra blockchain, has started a nonprofit the company likes to call Luna Foundation Guard (LFG) to support the Terra ecosystem and preserve the stability and adoption of its stablecoin. the most popular – UST. The new non-profit organization will focus on a number of major pillars that it sees as key to advancing the ecosystem and its creation is also the reason Terra’s LUNA token has been able to minimize losses in the current crypto bear market.

The newly formed foundation will serve as a mechanism to continue to drive engagement and adoption of Terraform Lab’s growing stablecoin, UST. Adoption of UST has continued to grow as the token, considered globally one of the most decentralized yet mainstream stablecoin options currently available, approaches a market capitalization of $11 billion (roughly Rs. 81,800 crore).

Terraform Labs founder and CEO Do Kwon will lead the Luna Foundation Guard charge, alongside founding member Nicholas Platias and several board members. The team will roll out foundation grants, starting later this month, for blockchain projects in the ecosystem that address open source development, research and education, and community growth within the ecosystem. Terra network.

How does the Terra blockchain absorb volatility?

The Terra blockchain offers a range of stablecoins, cryptocurrencies designed to track the price of fiat currencies. For example, TerraUSD tokens are pegged to the price of the US dollar and TerraEUR tokens are pegged to the price of the euro. All of these stablecoins, and more, are able to maintain their value thanks to LUNA, a token on the Terra blockchain specifically designed to absorb volatility.

Like any asset, the price of each stablecoin fluctuates based on supply and demand. This means that a spike in demand for TerraUSD could push its price above $1 (around 75 rupees). To address this issue, the protocol incentivizes LUNA token holders to convert LUNA to TerraUSD, thereby increasing the supply (and lowering the price) of TerraUSD. This works because $1 (around Rs. 75) of LUNA can still be used to purchase a TerraUSD token, even though that token is currently worth $1.01 (around Rs. 75).

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Shomik is Deputy Editor at Gadgets 360. As someone who has been sifting through the consumer tech space for the past four years, he has now focused on the crypto-verse. When he’s not converting currency values ​​in his head, you can find him in an intense five-a-side soccer match or taking on the new Destiny 2 weekly challenge on his Xbox. You can reach him for advice or questions at ShomikB@ndtv.com. Following

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