The magical story of Terra continues, but in an increasingly unexpected direction.

On the afternoon of May 16th, Luna Foundation Guard (LFG) finally disclosed the use of reserve assets (including BTC and other mainstream assets) that the market is most concerned about, but to everyone's surprise,As of the disclosure, there were only 313 BTC left in LFG's reserves, in addition to 39914 BNB, 1973554 AVAX, 1847079725 UST, 222713007 LUNA (221021746 in pledge).

This also means that, based on the current secondary market price,After excluding UST and LUNA, the total value of LFG's reserves is only about US$86 million, which is far from the billions of US dollars expected by the market.

As for the announced use of funds, the details are as follows:

• As of May 7, LFG still holds 80,394 BTC, 39,914 BNB, 2,628,1671 USDT, 2,355,590 USDC, 1,973,554 AVAX, 697,344 UST, and 1,691,261 LUNA.

• Since UST began to de-anchor significantly on May 8, LFG began to convert the above reserves into UST, including directly selling 26281671 USDT and 23555590 USDC, in exchange for a total of 50,200,071 UST; transferring 52189 bitcoins to the counterparty, deducting the returned 5313 bitcoins coins, a total of 1515689462 UST was exchanged;

• On May 10th, when UST fell to $0.75, pursuant to the service agreement entered into on January 10th, 2022, TFL managed and performed all financial, administrative, operational functions and support as required, and performed the following transactions on behalf of LFG Trade to keep the UST peg: sell 33206 BTC for 1164018521 UST;

• On May 12, LFG exchanged 883525674 UST for 221021746 LUNA and pledged it to prevent possible governance attacks.

The disclosure of LFG almost crushed the last confidence of users who still had expectations for UST. It was reflected in the secondary market that the price of UST dropped rapidly (cut in half again, UST, which had already rebounded and was trading sideways at 0.1-0.2 After the news was disclosed, it quickly dived, and the lowest touched 0.072 USDT.

It should be known that these reserve assets that have not been publicly used until today have always been regarded by the market as Terra's last life-saving talisman.

In the early self-rescue plan Proposal 1164, which was previously supported by the mainstream voice of Terra ecology, the description of this part of the reserve assets is "not to be used rashly to prevent being encircled by speculative funds from all walks of life." The potential information passed between the lines is these The money is still there (at least in part), it just needs to be put to good use.

Based on this "assumption", many discussions in the market in the past few days have focused on how to spend the money. The author of this article is also racking his brains to see if there is any feasible rescue plan for Terra, but with the With regard to the disclosure of reserve funds, these discussions have all become fantasies without rice.

That's when we reacted,The money that the community expects to be used wisely was originally spent on the back of the knife. As a result, not only did it fail to save the market (looking back, the 8th to 12th were the most serious days of the crash), and the reserves have also been consumed. Exhausted.

What is even more ironic is that earlier, Persian Capital proposed that Terra give priority to compensation for small UST holders, because the number of small holders is larger and the overall compensation amount is smaller. With the support of a group of big names in the industry, LFG also agreed to this plan in the latest disclosure.

At first glance, it seems that there is nothing wrong with it. If I don’t know why, I even want to give LFG a thumbs up, but think about it carefully,All 80,000 bitcoins were exchanged directly, and the remaining 313 bitcoins are just a "fraction". Only then did you think of "priority" to accept Xiaosan?

Furthermore, LFG’s ambiguous disclosure is also full of doubts, so let’s briefly put forward a few points for everyone to discuss.

• First, who is the counterparty to the bitcoin otc transfer mentioned in the reserve?

LFG said that it transferred 52,189 bitcoins to the counterparty on May 8, deducting the returned 5,313 bitcoins, and exchanged a total of 151,568,9462 UST. LFG should explain who the counterparty to the deal is.

Because from the results, this transaction can also be understood as LFG is using most of the reserve funds to protect the interests of the counterparty, and it is a priority and full amount (32334 UST / BTC) protection in terms of time and price.

Due to the huge amount of money involved, this transaction is hard not to attract people's imagination, and there are even voices of conspiracy theories in the market-even suspecting that Terra has taken it privately.

• Second, it is still the first bitcoin otc transfer, why should the counterparty return it? Will there be any further refunds?

There is a detail in the above transaction, the counterparty returned 5313 bitcoins. So what is the nature of this transaction, LFG should also further explain. Is it a mortgage or a sale? Or did it turn into a sale after the loan was completed due to a further downturn in the market?

Odaily Note: Regarding the first bitcoin otc transaction, LFG mentioned on the 9th that it "mortgaged a BTC loan of 750 million US dollars to an over-the-counter trading company to help UST re-link", and then transferred 52189 (number matching) BTC in two batches A certain address, but the address transferred these BTCs to the Gemini exchange a few hours later. It is impossible to judge the specific loan or sale details only from this information, and it is impossible to know whether the so-called "over-the-counter trading company" is who.

• Third, why use UST to buy LUNA?

LFG said that it exchanged 883525674 UST for 221021746 LUNA on May 12 and pledged it to prevent possible governance attacks.

This explanation makes sense on the surface, because with the crazy issuance of LUNA, Terra's governance tends to fail, so it is necessary to pledge more LUNA.

However, at that time Terra (at least Do Kwon) had chosen the "abandon LUNA, keep UST" proposal proposed by Proposal 1164. The core idea was to absorb the excess UST supply on the market as much as possible. Thinking along the logic of needing more pledged chips, it is no problem to buy LUNA, but since it has been decided to use reserve funds, why choose to sell UST to exchange for LUNA when there are other options? This will only cause more UST flows Returning to the market is contradictory to the idea of ​​"absorbing excess supply as much as possible".

Odaily Note: There are two feasible ways to replace UST with LUNA. One is to execute through the UST-LUNA two-way "casting & destruction" arbitrage mechanism of the Terra network. UST will be destroyed through this method, and the other is to exchange directly through the trading market. The exchange of UST through this channel will continue to circulate in the market. LFG uses the word swapped in their description of the deal, which looks more like the second route.

• Fourth, what is the priority to accept Xiaosan for the remaining money?

LFG needs to give clear standards, rules and timelines for the acceptance of small UST holders as soon as possible.

Finally, I would like to talk about the personal opinion of the author of Odaily. Since Terra stepped into the death spiral, although he has failed the trust of the market countless times, and the market is full of conspiracy theories, I have always been unwilling to speculate on Terra’s self-help means with malicious intent. This dubious disclosure from LFG comes out.

The flow of money does not lie, and while Luna crashed, LFG had a stockpile of assets worth billions of dollars, but it was depleted without the market knowing it, and it did nothing.

And why did you announce the whereabouts of the funds at this moment? Is it because of repeated questions from the market, or driven by other interests?

After this magical and tragic farce comes to an end, I don't know who will benefit, and who will be guaranteed by the so-called "priority". But I know that it is definitely not the retail investors who once believed in Terra and LUNA.