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Terra (LUNA), a DeFi token, is still on the rise. However, Bitcoin did the same thing this week, and Terra is participating.
Terra founder Do Kwon's grandiose goal to turn Bitcoin into Terra's own reserve currency is at the center of it all. How is he accomplishing this? By slamming the purchase button.
The Luna Foundation Guard (LFG), a charity organization founded by Kwon that focuses on all things Terra, aims to purchase up to $10 billion in Bitcoin. This will mostly be utilized as a reserve to assist UST in maintaining its peg. Since January, LFG has purchased $1.4 billion in Bitcoin.
“Besides Satoshi, we will be the largest single holder of Bitcoin in the world”, during a recent interview, Kwon stated. Yeah, a good one!
If you’re new to all of this, Terra is a Cosmos-based network that’s been having a great run recently.
On the one hand, LUNA, the company’s native staking and governance token, has been hitting new highs week after week. On the other hand, its UST stablecoin has surpassed DAI as the industry’s largest decentralized stablecoin since December. MakerDAO, the initiative that created DAI, is now considering major updates to catch up.
Decentralized stablecoins like UST and DAI are supported by other decentralized cryptocurrencies; DAI, for example, is backed by Ethereum and USDC (which isn’t genuinely decentralized, but that’s a different subject). Both DAI and UST are “algorithmic” stablecoins, which means they use a mathematical process to maintain them tied to the dollar.
It’s also not surprising that both of Terra’s properties have been successful at the same time.
Because users must burn LUNA each time they mint fresh UST, this is the case (thereby reducing its supply). As UST demand rises, a large amount of LUNA exits the market, causing FOMO.
The question now is how long a single group’s pump will be able to keep Bitcoin rising. Terra and Kwon have helped it to recoup its losses until 2022.
