Terra (LUNA), a stablecoin issuer, is going forward with its aim to amass a large amount of Bitcoin (BTC) reserves. After declaring last week that Terra wanted to acquire $10 billion worth of BTC in total, Do Kwon, Terra’s founder and CEO, said on Twitter that they have $3 billion in assets ready “to seed this reserve.”
In a new interview with Udi Wertheimer, the CEO also claims that Bitcoin was a superior choice for establishing reserves than any other crypto asset.
According to him it is the only digital asset with a provably calcified and hard coded base, it’s far more widely circulated than the others. As a result, it seems reasonable to consider Bitcoin as a physical currency. The BTC, according to Kwon, will “backstop short-term UST redemptions.” TerraUSD (UST) is Terra’s stablecoin that is tied to the US dollar.
In a new interview with Wertheimer, he goes into greater detail about this procedure.The basic structure is quite straightforward and they are looking into a variety of potential bridges to enable trustless, non-wrapped Bitcoin transfers into Terra. Let’s also assume that Bitcoin is available on Terra in tokenized form, with the mechanics still being investigated.
In that instance, they would incorporate it into a smart contract that allows individuals to swap UST for roughly a dollar’s worth of Bitcoin. So, let’s assume there’s a 1% or 2% discount, and anyone can mint UST by trading Bitcoin against the reserve at par value.
So, at any given time, you can trade one UST for little less than a dollar’s worth of tokenized Bitcoin on Terra, and then exchange one UST for slightly less than a dollar’s worth of Bitcoin.
The price of Terra (LUNA) is currently trading at $94.99, up about 2% in the previous 24 hours. The LUNA price has risen about 20% in the last week. The price of Bitcoin (BTC) may reach new highs as Terra prepares to establish its massive bitcoin reserve.