In order to increase its reserve fund for its UST stablecoin, Luna Foundation Guard (LFG), behind the Terra (LUNA) blockchain, bought 4,130 Bitcoins (BTC) this weekend, worth $176 million.
Terra adds more Bitcoin to UST’s supply
Do Kwon, the founder of the Terra blockchain, had recently announced that the reserve fund to support the UST stablecoin would be increased to $10 billion worth of Bitcoin.
The promise is being kept, as new purchases are being made on a regular basis over the counter (OTC) lately. The latest allocation took place this Sunday, for an equivalent of 4,130 new Bitcoins, acquired for a value of $176 million. This brings the total supply to almost 40,000 BTC.
The Luna Foundation Guard (LFG) provides the ability to track the reserve ensuring the stability of the UST, we see that Bitcoin represents 64.2% of its total at the time of writing this article:
Terra’s reserve fund distribution
At present, this fund is therefore composed as follows:
- 39,900 BTC for $1.69 billion;
- 398.66 million USDC;
4.27 million LUNA for $378.17 million; - 164.36 million USDT.
This brings the total to $2.63 billion, which provides additional protection for the reliability of algorithmic stablecoin.
A fund that keeps growing
Prior to this Sunday’s purchase, it should also be noted that April 6 saw a contribution of 5,040 BTC to this famous pool. It is also likely that these purchases will become recurrent over time, until they reach the $10 billion mark.
Moreover, it seems that the LFG does not want to limit itself to Bitcoin. Indeed, $100 million of AVAX, the native token of the Avalanche ecosystem, will also soon be added to the fund.
It is a real diversification strategy that is being implemented in order to decouple itself from its own blockchain.
Moreover, if UST is still in fourth place in the stablecoin ranking with a capitalisation of $16.7 billion, it could soon overtake Binance’s BUSD, which has a capitalisation of $17.9 billion.
While the algorithmic stablecoin is initially built to naturally balance at $1 through arbitrage, Terra has been able to add an extra layer of stability to boost investor confidence.
