Swiss asset manager GAM Holding said on Friday it is negotiating with Terra developer Terraform Labs to potentially support its UST stablecoin.
GAM said it could possibly invest between $2 billion and $3 billion to burn excess supply of UST, as the token gets dumped. GAM intends to help Terra re-establish the UST peg back to $1.
The move comes amid reports that Terra was courting private capital help for supporting the UST peg. The blockchain reportedly sought over $1.5 billion.
Terra founder Do Kwon also recently said Terra was considering making UST a traditionally collateralized stablecoin– which requires far more capital.
GAM sees potential in UST
GAM said in a press release that the key reasoning behind its support of UST was that it sees potential in the Terra ecosystem. The firm is also placing faith in UST’s algorithmic mechanism of maintaining its peg.
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GAM, which is headquartered in Zurich, has over $95 billion assets under management. It is also publicly listed on the SIX Swiss Exchange.
Terra network halted
Prior to the announcement, Terra had halted its blockchain to plug further losses in its main tokens. It was the network’s second such halt in the past 12 hours, with the chain yet to resume trading.
The move came UST depegged to a new low of below $0.2. Terra has outlined several measures to support the token, including burning excess UST and minting more LUNA to support the peg.
Still, its measures have so far proven to be ineffective. This has also sparked growing criticism of the project and its founder, Kwon.
Mass withdrawals from the blockchain have rendered it almost completely devoid of capital, making any solitary attempt at recovery quite futile.
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