Terra co-founder Do Kwon reveals that the firm will be buying Bitcoin “in perpetuity” to back new mints of its UST stablecoin.
Bitcoin (BTC) is the collateral asset of choice for the world’s biggest decentralized stablecoin, and one of its top executives says there was no other.
Speaking to Bloomberg on April 4, Do Kwon, co-founder of Blockchain protocol Terra, pledged to continue buying BTC to back the firm’s stablecoin, TerraUSD (UST).
Kwon: BTC buys will continue “in perpetuity”
Terra has made waves inside and outside the crypto community in recent weeks thanks to its massive Bitcoin buys.
Currently at just over 30,000 BTC, the reserves of Terra nonprofit the Luna Foundation Guard (LFG) are due to expand to the equivalent of $10 billion.
In his latest comments, however, Kwon went even further, saying that as long as UST is minted, Terra will keep buying BTC to back it.
“One important thing to remember about what we’re going here is that this is not a corporate treasury decision in the sense that I am not buying Bitcoin,” he told Bloomberg TV.
“I’ve already donated money so that we can build up these reserves on behalf of the community and we plan to be doing this in perpetuity, so the $3 billion or so that we’re buying initially to bootstrap the reserves is going to be followed up by… persistent buys of Bitcoin through UST seniorage… every time UST is minted, there will be new bitcoin that is added to the reserves.”
As a decentralized stablecoin, anyone can “mint” UST by burning $1 worth of another decentralized asset, Kwon explained. UST is the largest decentralized stablecoin with a market cap of around $16.5 billion. Tether (USDT), the largest stablecoin as a whole, has a market cap of $82 billion.
“The easy way to understand this is that we’re using Bitcoin to create a decentralized Forex reserve for the Terra stablecoin,” he summarized.
All hail the largest Bitcoin whale?
Active on Twitter, Kwon has previously pledged to overshadow any form of competition, notably MakerDAO’s DAI stablecoin.
The Luna Foundation Guard is well in the green as Terra co-founder Do Kwon stresses he is not “capable of moving” Bitcoin markets.
While cryptically telling followers that he was “just getting started” last week, Kwon has yet to give any further concrete details regarding the timeframes of the BTC buys.
The wallet belonging to LFG last saw inflows on March 30. With 30,727 BTC, it is the 29th largest BTC address.
Once complete, Terra’s reserves will outgun those of any corporate treasury, and will make Kwon and his team the largest Bitcoin whale.
LFG Bitcoin wallet (screenshot). Source: BitInfoCharts