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Terraform Labs CEO Do Kwon said last month that the project’s current long-term goal is to build reserves for the UST stablecoin to the excess of $10 billion in Bitcoin. The blockchain platform has, so far, progressed decently with this objective. The latest Bitcoin purchase was completed today.
Stacking the reserves, Terra’s LFG snaps another 2.5k Bitcoin
Data provided by BitInfoCharts shows Terra’s Luna Foundation Guard made two deposits to its Bitcoin wallet this week. The last which happened today involved 123.89917 BTC – a transaction that cost the foundation almost $5 million. Earlier on Wednesday, the LFG added another 2,508.94 BTC – it now holds 42,530.82726616 BTC.
This reserve is worth approximately $1.71 billion at the time of writing. However, the holdings languish $81.42 million in loss on account of the asset’s slump in the market.
While Bitcoin has been the primary token of choice to build the reserves, Terra said last week it is diversifying, with Avalanche’s AVAX being the first. The LFG exchanged UST for $100 million of AVAX, and Terraform Labs swapped another $100 million of Terra’s LUNA for AVAX. Terra revealed it plans to throw even more leading layer one assets into the basket of backers of UST.
The ultimate goal is to safeguard stability for UST’s peg to the dollar, even in extreme cases such as a black swan event. Bitcoin is seen as the major reserve to serve this role as Do Kwon has told Bloomberg that the Bitcoin additions will continue each time UST is minted. He also said the decision to pick Avalanche was based on its loyal fans and burgeoning growth.
Terra’s stablecoin market to get a boost with an Acala and Anchor Protocol collaboration
Polkadot’s Acala announced on Wednesday via a blog post that it is collaborating with Anchor Protocol, a lending tool on Terra’s blockchain, to enhance the larger stablecoin space.
In this line, Acala and Karura – a Kusama-based Polkadot parachain – will augment the basket of collateral options available for UST (Terra’s leading decentralized algorithmic stablecoin). Acala will boost the UST options via its bearing liquid staking derivatives – Liquid KSM, LKSM, while Liquid DOT, LDOT, will do the trick for Karura.
The move will also seek to establish “stand up deep liquidity pools” that would enable users to get cross access to either ecosystem – Terra’s and Polkadot. The pools would be initially developed on Acala before spreading into other parachains and layer ones. They will leverage UST and Polkadot’s USD stablecoins to enable ventures into either side of the divide.
There are further plans to deploy even more integrations in the future in an effort to collaboratively push for the growth of the decentralized stablecoin scene.
Anchor yield is now accessible to Polkadot
The announcement also revealed that Polkadot users who wish to earn a stable yield via Anchor yield could start by bridging their assets (LDOT and KSM) via Wormhole. The assets (now on Terra) can then be collateralized to borrow UST on Anchor. These Dotsama (Polkadot and Kusama) borrowers would then earn ANC incentives and can also deposit their UST to gain said yield.
Terraform Labs gifts $820 million in LUNA to the Luna Foundation Guard
Terraform Labs, the blockchain developer behind LUNA, has gifted Luna Foundation Guard 10 million LUNA worth about $820 million at current market prices. The Luna Foundation Guard is the non-profit organization building reserves for Terra’s UST (the largest algorithmic stablecoin in market cap) to maintain its peg with the US dollar.
Terraform Labs made the announcement via Twitter on Thursday. Transaction details, however, show that of the 10 million tokens, 7.8 million LUNA was transferred out of the LFG reserve wallet. This gift comes on the back of another $1.1 billion ($12 million LUNA) donated to the Luna Foundation Guard last month. The tokens were intended to enhance the reserves for the UST stablecoin.
The transfer increased LFGs reserves to $2.43 billion, with about 70% of the portfolio dominated by Bitcoin. The ongoing purchasing spree of the leading digital asset token has made Terra one of the largest holders of ‘digital gold’ globally.
Terra (LUNA) market performance
The recent bullish developments around Terra have not been sufficiently influential in stopping the dipping of the price of its native asset, LUNA. The token has lost 17.50% in the last seven days, dropping from $98.8 to $81.43 at writing.
This slump – prevalent across the cryptocurrency market – is notably much bigger relative to other altcoins. Solana (SOL) and Cardano (ADA) have shed 12.44% and 11.25%, respectively, while Avalanche (AVAX) is down 10.78% in the same period. On the day, LUNA/USD is down 5.51% – the largest margin among the top ten cryptocurrencies.
To learn more about Terra visit our Investing in Terra guide.
Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.