After Terra and two of its native cryptocurrencies fell in value, organizations behind the project stated that they would seek out outside assistance. One of the first legacy financial companies that stepped up to offer assistance is the Swiss asset manager – GAM Holding AG.
The official press release by the 40-year company reads that it has begun negotiations with Terraform Labs to “help support its Luna stablecoin (UST).”
GAM said it is “expected” to invest between $2 billion and $3 billion to “absorb excess supply of UST during its current selloff,” which should revive the UST peg to the US dollar.
“Our interest in supporting UST reflects our interest in supporting a vibrant, innovative, and resilient crypto market. We firmly believe in Terra’s ecosystem. Just as importantly, we believe in UST’s algorithmic approach to valuation. When investors have proper incentives, they naturally trade in ways that maintain price stability.” – commented GAM CEO Peter Sanderson.
Investors began arbitraging the stablecoin with LUNA because of its algorithmic nature and relationship with UST.
This caused massive selling pressure which led to a stupendous price slump. LUNA traded above $80 a few weeks ago, but currently sits at $0.000055. Terra is one of many exchanges that have stopped trading. announced hours ago, there was another (unrelated) Blockchain stoppage.