A few days ago the founder of Terra, the South Korean Do Kwon, announced the purchase of the equivalent of USD 100 million in bitcoin (BTC), through the Terra US Stablecoin (UST). And with this amount he increased his cryptoasset reserve by 2,500 BTC.
According to different portals, Luna Foundation, the organization behind the development of the Terra network as well as the Terra US stablecoin, has BTC reserves worth approximately USD 1,739 million.
Not an insignificant sum. And apparently, Do Kwon has plans to become the largest Bitcoin holder, second only to the wallets attributed to Satoshi Nakamoto.
“We expanded into the ecosystems of Solana, Avalanche, Ethereum, Polygon… (…), we plan to be everywhere where there are developers and users. When we want to expand into these ecosystems, we see that there is more trust in the Terra ecosystem, with respect to Luna. If a stablecoin has Bitcoin as collateral, no one questions it because it is the ultimate,” said Do Kwon, the South Korean.
Other Luna Foundation’s holdings, apart from the respective Bitcoin holdings, are USD Coin (USDC), Tether (USDC), and its own Terra token (Luna).
Terra US is an algorithmic stablecoin that has managed to maintain parity in its price with the US dollar, thanks to the issuance or burning of Terra, the network’s native token of the same name.
How does it manage to maintain this parity?
For each UST issued, one dollar of LUNA (whose price is volatile) is burned. In this way Luna keeps UST parity with the US dollar through an arbitrage mechanism.