Stablecoin issuer Terra (LUNA) is moving forward with its plans to accumulate a massive trove of Bitcoin (BTC) reserves.
Do Kwon, Terra’s founder and chief executive officer, says on Twitter that they have $3 billion in funds ready “to seed this reserve” after announcing last week that Terra planned to accumulate $10 billion worth of BTC in total.
The CEO also tells Udi Wertheimer in a new interview that Bitcoin was a better choice to establish reserves with than any other crypto asset.
“It’s the only asset with a provably calcified and hard code base and much better distributed than all the other digital assets. So it makes sense to think about using Bitcoin as a hard currency.”
Kwon has said that the BTC will “backstop short-term UST redemptions.” TerraUSD (UST) is Terra’s US-dollar value pegged stablecoin.
In his new interview with Wertheimer, he explains that process in further detail.
“The basic schema is very simple. We’re exploring a number of different bridges to be able to move Bitcoin into Terra in a trustless, nonwrapped fashion. And let’s assume that Bitcoin is available in tokenized form on Terra, with the mechanics thereof still being researched.
In that case, what we would do is we would put it into a smart contract whereby people can trade in UST to get roughly a dollar’s worth of Bitcoin. So let’s say minus 1% off or minus 2% off, and people can mint UST by trading in Bitcoin against the reserve at par value. So at any given time, you can trade in a dollar’s worth of tokenized Bitcoin on Terra and then get one UST, and then you can trade in one UST for slightly less than a dollars’ worth of Bitcoin.”
Terra’s native token LUNA is trading for $92.96 at time of writing.
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