The Luna Foundation invests $450 million in DeFi


On February 10, the Luna Foundation Guard (LFG) announced that it would add $450 million to its revenue reserves for Terra DeFi, the Anchor Protocol.

Terra’s creator Do Kwon is helping the DeFi lending protocol maintain its relatively high 20 percent return on stable terrestrial reservoirs for the rest of 2022 — but why would it?

The Anchor protocol is at the heart of the Terra DeFi ecosystem as it promises investors a relatively safe return on their US dollars. At Aave, for example, investors get only 5-10% of deposited stablecoins, while in Anchor Protocol they get a fixed return of 20% over a year. As a result, the Anchor Protocol has become the most important DeFi protocol in the Terra ecosystem and now manages nearly $10 billion in terrestrial reservoirs. But the revenue reserves needed to guarantee an annual return of 20 per cent of the terrestrial reservoirs have fallen by more than 80 per cent in recent months due to a lack of borrowing. A return of 20 per cent could not have been guaranteed for much longer and could have fallen to 13-15 per cent.

This is exactly why the Luna Foundation Guard is now stepping in.

The temporary cash injection of US$450 million is intended to give the Anchor Protocol more time to develop a sustainable economic model. At the current pace of development, cash injections should help the protocol make ends meet for about nine months.

The DeFi protocol is now planning to expand its service to other blockchains, including Avalanche, Solana, and Atom, to increase its revenue.

In a discussion about governance, an employee at Hashed, a venture capital fund affiliated with Terra, commented:

We believe that sufficient revenue reserve ensures the growth of ground tanks and benefits all stakeholders. The goal is to ensure that Anchor achieves mass adoption while essentially maintaining “decentralization and self-sufficiency

Just a few months ago, purchased the naming rights to the Los Angeles Lakers stadium for marketing purposes. Terra is now following suit and has signed a five-year sponsorship agreement with the Washington Nationals baseball team.

The first steps toward that agreement began in January. Du Kwon, the co-founder of Terraform Labs, the company behind Terra Blockchain, announced at the time that the money would be raised for a partnership with an as-yet-unnamed professional sports franchise.

In line with Kwon’s original proposal, about $40 million will be invested in a deal with Washington Nationals.

In addition, as part of the agreement with the various strategies, the adoption of DeFi on Terra will be promoted. For example, the two partners plan to make it possible to pay using floor lockers at the baseball team’s exclusive Nationals Park Club.

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