It was Many headlines in recent weeks have revolved around TerraForm Labs founder Do Kwon, who created the LUNA crypto token and TeraUSD (UST) stablecoin.
Kwon previously announced plans to receive $10 billion in bitcoin as reserves to “open up a new monetary era of the bitcoin standard.” The funds will be used to support UST in decentralized foreign exchange reserves to keep the value of the stablecoin at a fixed level.
On Wednesday, a few hours before talking to Vanity Kippa, he casually said: tweeted That he bought $230 million in bitcoin.
Kwon told gaming-updates that Terra has already bought $1.6 billion worth of bitcoin and plans to buy another $1.4 billion with capital from the Luna Foundation Guard. Terra Protocol will buy the remaining $7 billion in bitcoin through users who want to mine UST. “Users will hold bitcoins in reserve and then receive UST,” he explained.
But more interestingly, these bitcoin purchases are just the beginning of a larger roadmap for Kwon and Terra to deep expand and integrate the stablecoin into the crypto ecosystem.
Kwon plans to support UST along with other Tier 1 (L1) blockchains such as Solana and Avalanche in the near future.
“We are big supporters of bitcoin, so we just keep buying when the opportunity arises,” Kwon said. “Over time, Terra will be supported by a set of top tier 1 facilities.”
He did not explicitly specify what L1 would bring, but said that bitcoin would remain the main reserve for UST. “I don’t think we’re going to cover all ecosystems in the coming weeks, but we’ll stock up on some of the popular ones,” Kwon said.
According to CoinMarketCap data at press time, the market supply is $16.72 billion and the stablecoin’s current volume is $672 million, up 9.2% from the last 24 hours. UST is the 14th largest cryptocurrency by market cap.
As the Terra ecosystem begins to grow significantly under other L1s such as the Avalanche blockchain, there is a possibility that UST will be backed by multiple Avalanche, AVX tokens, he said.
“If you enter UST on Avalanche, you will be trading AVAX instead of Bitcoin, and in turn, the size of AVAX reserves will improve,” he said.
He added that the addition of other types of collateral will expand the potential user base of Terra stablecoins. “For example, if Terra is the largest consumer of SOL stablecoins. Will happen, [Solana] AVAX and the repository are so large that each has an inherent consistency with the ecosystem’s user base.”
He added that the “piece of the pie” that the Moon is taking home is shrinking, but the available market will grow significantly.
Stablecoin growth is different from stable
Stablecoins get their name from the fact that they are “stable” due to the 1:1 ratio that ties their value to an external reserve, usually the US dollar, but can also be pegged to other assets such as UST to bitcoin. . This means that each stablecoin in circulation is backed by $1 in its relative reserves, be it the US dollar or any other asset.
The stablecoin ecosystem has expanded significantly over the past year, with even the US Federal Reserve stating in its January 2022 Crypto Assets Report that they have “faced huge growth over the past year” and that “the stablecoin has the potential to be backed. New generation innovation. ,