HomeBitcoin NewsTerra Luna’s founder says protocol would be the largest Bitcoin holder

Terra Luna’s founder says protocol would be the largest Bitcoin holder

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Terra Luna’s founder, Do Kwon, has mentioned that the protocol would be the largest Bitcoin holder. This assertion stems from an earlier announcement by the Luna Basis Guard (LFG) about making a Bitcoin reserve.

LUNA’s $1B Bitcoin reserve

The LFG introduced securing $1 billion in a non-public token sale earlier within the yr. The funds will likely be used to create a Bitcoin reserve for The UST stablecoin. The funding spherical noticed participation from Three Arrows Capital and Bounce Crypto. The reserve will enhance the soundness of UST.

The LUNA token is used to peg the worth of the stablecoin to that of the US greenback. UST isn’t backed by any fiat property in reserve. The worth is realized by means of minting and burning LUNA tokens. If UST’s value dips beneath $1, it’s swapped for LUNA tokens and bought for $1. If UST’s value goes above $1, LUNA holders can commerce their tokens for 1 UST and understand income.

This mechanism might fail to work throughout market bears. That is the rationale behind the creation of the Bitcoin reserve. Bitcoin’s worth doesn’t have a excessive correlation with Terra’s ecosystem; due to this fact, Bitcoin reserves can be utilized to decrease the dangers of a “dying spiral.”

The LFG has additionally introduced plans to increase its reserve utilizing non-correlated property. It will additional tighten the soundness of the UST stablecoin.

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Terra to be the biggest Bitcoin holder

In a current tweet, Do Kwon said that Terra would develop into one of many largest Bitcoin holders. He even tagged the CEO of MicroStrategy, Michael Saylor, hinting that Terra might surpass his Bitcoin holdings. At present, MicroStrategy has 125,051 BTC holdings, estimated to be value greater than $5.4 billion.

By having a big Bitcoin reserve, the danger of the UST stablecoin dropping its worth is minimized, and it ensures the long-term sustainability of the protocol. LUNA’s value made a serious uptrend after the Bitcoin reserve was introduced. Regardless of the current market recession, LUNA is simply 11% beneath its all-time excessive of $103. On the time of writing, LUNA was buying and selling at $90, having gained by73% over the previous month.

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