• Terraform Labs Plans to Amass $10 Billion in Bitcoin Cash for Reserves

  • Do Kwon, the founder of Terraform Labs and Ethereum competitor Terra (LUNA), has stated that the project wants to amass $10 billion in Bitcoin to add to its stablecoin reserves. The funds will be used to support the UST stablecoin.

    Terra is a Proof of Stake (PoS) blockchain, according to Binance Research. LUNA is also “used in the creation of stablecoins (TerraSDRs), as a price stability mechanism, as well as for staking and network governance,” according to them.

    Terra was created by Terraform Labs, a South Korean blockchain business launched in January 2018 by Danial Shin and Do Kwon. Terra’s mainnet launched in April 2019, and the native token’s price performance was originally modest.

    The algorithmic stablecoin’s peg to the US dollar is maintained using LUNA. Despite the fact that UST is not backed by any assets in reserve, its value is determined by the minting and burning of LUNA, as users can always exchange $1 worth of LUNA for 1 UST and vice versa.

    UST can be swapped for LUNA and sold for $1 if the price falls below $1, making it appealing to arbitrage traders. If the price rises above $1, LUNA token holders can profit by selling their tokens for 1 UST. To make these transactions possible, LUNA is minted and burnt.

    Kwon claimed in a tweet that a UST backed by $10 billion in Bitcoin would “start a new monetary era of the Bitcoin standard.”

    The BTC reserves, according to Kwon, will be used to backstop short-term UST redemptions as well as serve as a decentralized FX reserve. Do Kwon recently stated that as the Terra Protocol builds up its reserve, it will be one of the major BTC holders.

    The Luna Foundation Guard (LFG) revealed earlier this year that it had raised $1 billion in a private token sale to create a bitcoin reserve for the stablecoin. Jump Crypto and Three Arrows Capital spearheaded the investment round, and the reserve is expected to boost UST’s stability.

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