Luna Foundation Guard buys $1.5 billion in Bitcoin.
According to the company, the deal involved a $1 billion over-the-counter trade with Genesis for $1 billion in UST and a $500 million BTC purchase from Three Arrows Capital. At the time of writing, LFG’s total bitcoin holdings stood at 80,394 BTC, or approximately $3.5 billion. He also owns a large amount of AVAX, the native token of Avalanche, worth over $100 million.
“For the first time, you’re starting to see a pegged currency trying to meet the Bitcoin standard,” said Do Kwon, co-founder and CEO of Terraform Labs. “He’s making a strong directional bet that keeping a large chunk of those foreign exchange reserves in the form of a native digital currency will be a winning recipe.”
Why does Terra buy Bitcoin?
Do Kwon revealed in March that Terra intended to purchase over $10 billion worth of bitcoins to serve as reserves for its UST stablecoin. He explained that funds from Bitcoin reserves would be used to support short-term UST redemptions and a decentralized foreign exchange reserve.
In addition to Bitcoin, Kwon is backing UST with native tokens from layer-1 blockchains, as seen in the $100 million acquisition of AVAX, the native token of Avalanche, as it thinks by introducing new forms of collateral, the pool will expand Terra Stablecoins’ potential user base.