Thu. Aug 11th, 2022

After all, there may be hope for Terra UST stablecoin. One of Switzerland’s largest asset managers has announced that it is in talks to invest up to $3 billion in the project to revive it and bring it back to its $1 parity at a time when it collapsed and brought LUNA down with it. UST is an algorithmic stablecoin that relies on smart contracts and the free market to maintain its peg at $1 (though this could change in the near future). Its value depended on arbitrage traders minting LUNA when the UST exceeded $1 and burning it when the UST was below the dollar, until the house of cards came crashing down. GAM wants to save the project. The Zurich-based company, which is listed on the SIX Swiss Exchange and has $95 billion in assets under management, stated today in a Press release that it intends to invest between $2 and $3 billion “to absorb the excess supply of UST during its current liquidation. The move seeks to restore UST’s peg to the US dollar.” Peter Sanderson, CEO of GAM, commented:

Our interest in supporting UST reflects our interest in supporting a vibrant, innovative and resilient crypto market.

We firmly believe in the Terra ecosystem. Just as important, we believe in UST’s algorithmic valuation approach. When investors have the proper incentives, they naturally trade in ways that maintain price stability. When black swan events impact the markets, opportunities flourish. We see opportunities in UST’s recent activity and continue to see promise in Terra’s broader strategy.

The news comes just days after Do Kwon was reported to be in talks with several wealthy investors about a bailout. However, not all big investors want to be associated with the failed project. The world’s largest investment manager, BlackRock, denied any link to USTwith Citadel Securities, another major firm that even has ties to crypto, following suit.

At press time, UST is trading at $0.117 down 71% in the last day. Its market capitalization has shrunk to $1.8 billion, a tenth of its former glory at $18 billion.

(UST price evolution since May 10).

By Farwa Raza

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