JustCryptoWeekly

DESCRIPTION: Non-profit organization backing the Terra foundation, Luna Foundation Guard,(LFG) purchases $1.5 billion worth of BTC to back Terra stablecoin, UST, and becomes the second-largest Bitcoin holder.

TERRA FOUNDATION BECOMES THE SECOND-LARGEST COOPERATE HOLDER OF BITCOIN.

[TL;DR]

Luna Foundation Guard, LFG, a Singapore-based non-profit organization supporting the Terra network, purchased $1.5 billion worth of Bitcoin, putting the foundation’s Bitcoin reserve at about $3.1 billion. Terra Foundation, which is now the second-largest corporate Bitcoin holder after business intelligence company Microstrategy, has achieved one-third of its commitment to purchase $10 billion worth of BTC to back its stablecoin, UST… Learn more in the body of the article.

KEYWORDS: LFG, cryptocurrency, Luna coin, TerraUSD, Bitcoin, cryptocurrency reserves, stablecoin, UST.

Terra ecosystem/ Terra Twitter

Terra foundation has surpassed Tesla CEO, Elon musk to become the second-largest corporate Bitcoin holder. The foundation which previously owned about 42,530 BTC has received 37,863 more Bitcoins in an over-the-counter (OTC) deal financed by the LFG (Luna Foundation Guard). The foundation is on a mission to purchase $10 billion worth of Bitcoin to support their stablecoin UST, a commitment that is now about one-third fulfilled. 

LFG made the $1.5 billion deal in a bid to support the Terra ecosystem by backing UST stablecoin. $1 billion worth of bitcoin was acquired from Genesis trading, a leading cryptocurrency brokerage firm, while the remaining $500 million was obtained through the crypto hedge fund, Three Arrows Capital (3AC). The Genesis aspect of the deal is the first of its magnitude in an OTC deal, with Genesis Asia Pacific taking on $1 billion worth of UST in exchange for $1 billion worth of BTC.

The foundation now possesses 80,393 BTC (valued at $3.1 billion) putting them among the top 10 corporate Bitcoin holders in the world, second only to the business intelligence company Microstrategy, a firm that owns 120,051 BTC.

HOW DOES THE PURCHASE AFFECT THE STABLECOIN?

Do Kwon, CEO of Terraform labs and director of LFG sees this purchase as an opportunity to defend the PEG of their stablecoin UST, even if it were to de-PEG over time. The Bitcoin reserves are meant to prevent death spirals and diversify the types of collateral that can protect the stablecoin’s value. 

           Death Spiral Scenario/ Twitter

In an interview with Laura Shin, he explained the benefits of UST having Bitcoin as a backing for Terra Luna and its stablecoin’s value, hence the reason for the $10 billion Bitcoin goal.

In conclusion, Terra’s growth had been a factor that reshaped the crypto markets over the last two years and the use of foreign currency as a support to strengthen the UST forex reserve is expected to improve the resilience of the coin to market volatility and strengthen liquidity around the UST peg significantly. Do Kwon believes the BTC reserves backing the stablecoin will open a new monetary era of the Bitcoin standard, and that is something to look forward to.