In the previous weeks, the Terra Luna crypto-asset recorded a disastrous decline that shocked the cryptocurrency industry following its slump. Terraform Labs designed the token using the stable coin TerraUSD (UST) method, thus sustaining its $1 peg. It is also crucial to note that the asset’s worth declined from $1 to $0.15 sometimes in May, thus resulting in an 85% loss. Following the asset’s decline, the crypto mogul LUNA Foundation disclosed that it disposed of 80,082 pieces of its Bitcoin stocks sometime in May 2022.
The foundation tweeted that it disposed of its Bitcoin stock for UST currency and other necessities. The company further disclosed that on the 7th of May 2022, it possessed a stock of 80,394 bitcoins and other digital currencies.
How the crash occurred
It is believed that the foundation commenced altering its stock and changing it into UST on or about the 8th of May 2018. The alteration was conducted after the asking price of UST adequately declined to costs that are under one dollar. At that time, the alteration was allowed due to the foundation’s commitment to preserving the status of the Terra ecosystem. The Luna Foundation possessed a favourable position to perform the alteration by consenting to purchase transactions and transmitting BTC to a third party.
The transmissions and executions enabled the third parties to commence any transactions with Luna Foundation without adhering to the substantial timelines and allocated portions. The foundation executed an agreement with Master Services sometime in January 2022 via TFL, an authoritative body. The TFL ensured that various transactions were done efficiently and offered advice when requested following the currency’s decline.
The company will compensate UST customers
Following the currency’s decline, the foundation executed a final attempt to sustain the peg’s worth, TFL being its official agent. TFL officiated various transactions during this period, including the trading of the currency and others. The foundation recently announced that it intends to utilise its final assets to compensate all UST customers.
Luna intends to commence compensation for consumers with fewer amounts. The foundation further disclosed that it was analysing alternatives on how to issue the compensations and thus promised to disclose further information in due time.