Terra Luna just raised big money to fund its Bitcoin reserve for the UST stablecoin.
Covered:
- Luna Foundation Guard Raises $1 Billion In Bitcoin
- UST Is On The Rise
- LUNA Price Update
The markets are treading on thin ice as macro uncertainty looms over the traditional financial and crypto markets. Terra (LUNA), however, is holding green in a sea of red, thanks to a huge funding round for its native stablecoin UST.
Luna Foundation Guard Raises $1 Billion In Bitcoin
$1B BTC reserve for $UST
– Largest ever cap formation in crypto
– $BTC used as reserve currency to scale UST
– LFG has plans to scale reserve to larger numbers— Do Kwon (@stablekwon) February 22, 2022
The Luna Foundation Guard (LFG – nice) just raised $1 billion through an over-the-counter (OTC) sale of LUNA, led by crypto investment giants Jump Crypto and Three Arrows Capital, with Republic Capital, GSR, Tribe Capital, DeFiance Capital, among others.
The $1 billion will be used to purchase Bitcoin (BTC) to be used as a reserve backing for UST, making UST a partially-backed algorithmically stablecoin, as it is backed by another asset besides its own LUNA token.
I guess with the Luna news of BTC, now Luna is transitioning to becoming a partially backed algo stable. Seems inevitable in that the fear around 0 backing likely deterred a bit too many and was hinted at before to establish faith in the peg.
— guleid (@riddle245) February 22, 2022
And what even is an “algorithmic stablecoin”, you might ask? In short, it’s a form of stablecoin that maintains its peg with the blockchain’s native token, LUNA, rather than a basket of various assets seen in other popular stablecoins like USDC and USDT. To read more about the mechanics of UST, be sure to click here.
UST Is On The Rise
The news is an answer to a long-time wish of LUNA fanatics, as backing the token with Bitcoin further decentralizes UST, just as founder Do Kwon envisioned.
A decentralized economy needs decentralized money.
And decentralized money needs decentralized reserves.$BTC $UST
— Do Kwon (@stablekwon) February 22, 2022
Beyond further decentralization of the stablecoin, backing UST with Bitcoin provides greater trust in the stablecoin, as UST is no longer solely connected to a single point of failure in LUNA.
Someone took the UST minting machine up a notch recently, it seems, as the market cap of UST is growing larger. It just recently surpassed the $12 billion milestone.
As shared by crypto analytics firm Messari, UST’s growth has largely been driven by LUNA’s Columbus-5 upgrade, which has incentivized more users to join the LUNA ecosystem. This is a great thread from Messari, I recommend you check out the full post:
3/ Before 100% of seigniorage was burned, a portion was allocated to validators to encourage accurate voting.
To compensate, Columbus-5 dividends swap fees to validators that would have otherwise been burned.
This change has resulted in higher yields & more $LUNA staked. pic.twitter.com/7jPDMAacJb
— Messari (@MessariCrypto) February 22, 2022
LUNA Price Update
LUNA holders are surely feeling comfortable today after the market reacted to the news. The token wicked above $55 before coming back down to its current price of $53, but what’s more impressive is its recovery against Bitcoin and Ethereum. Here are all three charts so you can see what I mean:
Since the end of January, LUNA is up 13%, while most of the market has stepped another leg lower. While the USD price has stayed flat, a falling Bitcoin and Ethereum price means that LUNA has actually been gaining on the two top crypto assets. The token is up 17% against Bitcoin and over 19% against Ethereum.
The strong confluence we’re seeing across all pairs is telling us that the market thinks LUNA is a strong hold. And with the news that UST is getting backed by the hardest money on earth, it’s no wonder why investors are still bullish on Terra.
The post Terra UST Is Getting Backed By $1 Billion In Bitcoin appeared first on CryptosRus.
Terra UST Is Getting Backed By $1 Billion In Bitcoin
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