The Luna Foundation Guard (LFG), official stewards of Terra’s bitcoin (BTC) reserves, released a statement on Monday documenting how it disbursed millions of dollars' worth of crypto in its failed attempt to maintain the peg of stablecoin terraUSD (UST).

In the statement, LFG notes that it has almost entirely depleted its BTC reserves from around 80,000 bitcoins to 313. The remaining assets, which mostly comprise the crashed UST and LUNA tokens, will apparently be used to compensate investors.

Decrypt | Sander Lutz | May 15, 2022

Vitalik and CZ took to Twitter this weekend to critique Terra—and the very premise of the UST token itself.

In the aftermath of last week's historic collapse of Terra’s stablecoin, UST, and native token, LUNA, crypto leaders have emerged to offer their perspectives.  UST isn’t backed by cash or assets like other leading stablecoins. Instead, an algorithm ties UST’s value to LUNA via a burning/minting mechanism designed to keep UST at $1. That mechanism collapsed last week, wiping out UST and LUNA, and with them some $40 billion in value.

Vitalik Buterin, creator of Ethereum:

“We need to emphasize that the two,” Buterin said, referring to algorithmic stablecoins and asset-backed stablecoins, “are very different.  [The entire premise of UST] from inception [was] intentionally misleading and inherently flawed.

See:  Yellen Renews Call for Stablecoin Regulation After Terra’s algorithmic stablecoin tumbles

After days of uncharacteristic silence, Do Kwon reemerged on Friday with a new plan to resuscitate LUNA. The idea includes abandoning UST permanently and resetting LUNA to a 1 billion token circulation, with tokens to be distributed to both former holders wiped out by last week’s events, and to current holders.

ChengPeng Zhao, Binance CEO tweet:

• “forking” LUNA, or splitting the blockchain to create a second version, “won’t work. [It] does not give the new fork any value.  That’s wishful thinking."
• Zhao elaborated that the fatal flaw of such a strategy is Kwon’s failure to understand that “minting coins (printing money) does not create value, it just dilutes the existing coinholders.”
• Zhao went further, openly questioning the transparency of Kwon and Terra’s handling of the crisis spurred by UST and LUNA’s collapse.  “Where is all the BTC that was supposed to be used as reserves?” Zhao wanted to know.

Continue to the full article --> here