The Luna Foundation Guard (LFG) has already purchased approximately $1.4 billion in Bitcoin ($BTC) to act as a reserve for the Terra ($LUNA) protocol’s UST stablecoin.
Luna Foundation Guard Buys $1.4 Billion In $BTC For $UST
Although it is unclear how the BTC will be wrapped for usage by the protocol, the transparency of the Bitcoin blockchain allows us to know how much of the main cryptocurrency the protocol has already purchased.
After blockchain sleuths discovered the LFG’s BTC address, a Twitter bot was constructed to follow its purchases.
The @LFG_org now #hodl 30,727.98 #Bitcoin at a total balance of $1,440,887,815.18 USD in the Bitcoin Underlying Strategic Strategy Yolk or BUSSY Reserve.
— LFG_Reserve (@LFG_Reserve) March 31, 2022
According to the bot, LFG’s BTC address has already acquired 30,727.98 BTC, which is worth moreover $1.4 billion. According to CryptoGlobe, the group has already raised $2.2 billion to purchase BTC.
Do Kwon, Terra’s founder has previously stated that the Terra Protocol would be one of the largest holders of the flagship cryptocurrency as the project builds its BTC-denominated reserves to offer an extra degree of protection to its decentralized stablecoin.
According to CryptoGlobe, Terraform Labs intends to amass $10 billion in Bitcoin to contribute to the project’s stablecoin reserves.
Unless the price of Bitcoin does not rise dramatically in the near future, the LFG may wind up purchasing around 180,000 BTC to generate reserves for the UST stablecoin. So far, it has made purchases in lots of roughly $125 million.
Terra is a Proof of Stake (PoS) blockchain that uses LUNA to maintain the algorithmic stablecoin pegged to the US dollar. While UST is not backed by any reserve assets, its value is fixed by the minting and burning of LUNA, since users may always exchange $1 worth of LUNA for 1 UST and vice versa.
If the price of UST falls below $1, it may be exchanged for LUNA and sold for $1, making it appealing to arbitrage traders. If it rises above $1, LUNA token holders can profit by exchanging tokens for 1 UST. To allow these transactions, LUNA is coined and burnt.
Read More: One VanEck Valuation Framework Valuation Estimates The Potential Pricing For Bitcoin To Reach $1.3M