Stablecoins are cryptocurrencies that aim to peg their market value to a more stable asset. This latest transaction by the Luna Foundation Guard brings it closer to its goal of accumulating $10 billion of bitcoin to back the U.S. Terra stablecoin or UST.
Do Kwon, cofounder and CEO of Terraform Labs, the group that launched the Terra blockchain, said he expects to reach the $10 billion goal by the end of the third quarter.
The reserve now holds about $3.5 billion in bitcoin, which puts the UST Forex Reserve in the top 10 bitcoin holders in the world. It also holds north of $100 million in avalanche, another cryptocurrency.
In its latest bitcoin acquisition this week, the Luna Foundation Guard closed a $1 billion OTC swap with crypto prime broker Genesis for $1 billion worth of UST. It also bought $500 million of bitcoin from crypto hedge fund Three Arrows Capital.
U.S. Terra also joined the top 10 cryptocurrencies by market cap, according to CoinGecko.
“For the first time, you’re starting to see a pegged currency that is attempting to observe the bitcoin standard,” Kwon said. “It’s making a strong directional bet that keeping a lot of those foreign reserves in the form of a digital native currency is going to be a winning recipe.”
“The jury’s still out on the effectiveness on the subject, but I think it is symbolic in the sense now that we live in a time where there’s excess money printing across the board and when monetary policies highly politicized that there are citizens that are self-organizing to try to bring systems back to a sounder paradigm of money,” Kwon added.