The founder of Terraform Labs and chief executive officer, Do Kwon, revealed that the company added as many as 5000 bitcoins in a tweet on the microblogging site.
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The Bitcoin reserve of the company is now worth $1.6 billion and has a goal of attaining $10 billion to back up its TerraUSD Stablecoin. The Luna token of Terra hit $119 of late, which was a record high but eased back to $110.
Terraform Labs founder and CEO Do Kwon said that he bought $230 million worth of Bitcoin through the Luna Foundation Guard, intending to add them to the reserves of bitcoin of the company. More about the same is in the paragraphs that follow.
TerraUSD and Adding to the Reserves
The purchase was carried out to add to the reserves of Terraform Labs’ through the non-profit organisation, Lune Foundation Group, as part of the backing up of the stablecoins. In the last month, Kwon revealed that TerraUSD would be backed up by at least $10 billion worth of bitcoin, among the other assets.
Stablecoins, it may be mentioned here, are the digital currencies pegged to assets like the US dollar, which has enjoyed rising popularity over the past years, as they have represented a more stable investment other than the more volatile cryptocurrencies.
TerraUSD is the 4th largest stable coin behind Tether in terms of market value, USDC, and Binance USD, as per CoinMarket Cap. Like the dollar-backed stable coins, TerraUSD is not backed by the US currency.
TerraUSD is the algorithmic stablecoin, which uses a swap mechanism that pegs its value at $1. The algorithm burns and destroys luna tokens to create new TerraUSD tokens. As such, any luna holder will be able to swap $1 worth of luna for $1 terraUSD. This has made the luna tokens and fewer terraUSD token supply, which brings the value back to $1.
This purchase brings Terraform Labs’ bitcoin value holdings to $1.6 billion, a part of its way towards achieving the $10 billion target. Terraform’s Luna token attained an all-time high of about $119 in the past week, according to CoinMarketCap data, whereas it retreated since then from the highs. The coin is still up by 4.34% over the last seven days, trading at $109.67.
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