Terra Ecosystem Announces Luna Foundation Guard to Protect Its Stablecoins from Volatility
Terraform Labs, the company behind the Terra blockchain, has established a non-profit the company prefers to call Luna Foundation Guard (LFG) to support the Terra ecosystem and protect the stability and use of universal stablecoins. most variable – UST. The new nonprofit will highlight some of the key pillars they see as core in driving the ecosystem, and its creation is also why Terra’s LUNA token can mitigate the damage. in the current bearish cryptocurrency market.
The newly created platform will serve as a mechanism to further drive participation and adoption of Terraform Lab’s burgeoning stablecoin, UST. UST adoption has continued to grow as the token, considered one of the most decentralized yet mainstream stablecoin options available, reaches a market cap of $11 billion (approximately Rs 81,800).
Terraform Labs Founder and CEO, Do Kwon, will be in charge Luna Protection Organization, along with founding member Nicholas Platias and several board members. The team will launch foundation grants, starting at the end of the month, for blockchain projects in the ecosystem that address open source development, research and education, and community development in the Terra network.
How does the Terra blockchain absorb volatility?
Blockchain Terra features a range of stablecoins, cryptocurrencies designed to track the prices of fiat currencies. For example, the TerraUSD token is pegged to the price of the US dollar, and the TerraEUR token is pegged to the price of the Euro. All these stablecoins and more, can maintain their value because MOONLIGHT, 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. That means a spike in demand for TerraUSD could push its price above $1 (around Rs 75). To get around that, the protocol incentivizes LUNA token holders to convert LUNA to TerraUSD, thereby increasing the supply (and decreasing the price) of TerraUSD. That works because $1 worth of LUNA (about Rs 75) can always be used to buy a TerraUSD token, even if that token is currently worth $1.01 (about Rs 75). ).
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