Decrypting DeFi is Decrypt’s DeFi email newsletter. (art: Grant Kempster)

DeFi token Terra (LUNA) continues to rise. But this past week, so did Bitcoin—and Terra is involved.

It’s all about Terra founder Do Kwon’s ambitious plan to turn Bitcoin into Terra’s very own reserve currency. How exactly is he doing this? By smashing the buy button.

The Luna Foundation Guard (LFG), a nonprofit organization focused primarily on all things Terra and led by Kwon, plans to buy up to $10 billion worth of Bitcoin. This will be primarily used as a reserve to help keep UST’s peg. LFG has already bought $1.4 billion worth of Bitcoin since January.

“Besides Satoshi, we will be the largest single holder of Bitcoin in the world,” said Kwon during a recent interview. Quite a quote.

If you’re just tuning in to all this, Terra is a Cosmos-based network that’s been enjoying a serious run of late.

On the one hand, its native staking and governance token LUNA has been hitting all-time highs week after week. On the other, its UST stablecoin has become the industry’s largest decentralized stablecoin, overtaking heavyweight DAI back in December. Now MakerDAO, the project behind DAI, is mulling big updates to catch up.

UST and DAI are called decentralized stablecoins because they’re backed by other decentralized cryptocurrencies; DAI, for example, is backed by Ethereum and USDC (which itself isn’t truly decentralized, but that’s another story). Both DAI and UST are “algorithmic” stablecoins, meaning there’s a math-based mechanism in place keeping each…


Source link

Leave a Reply

Your email address will not be published.

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed