Terra (LUNA), a blockchain using Bitcoin to back its new U.S. dollar stablecoin, has just bought 5,000 BTC.
According to Whale Alert, Terra transferred over 231 million USDT to Binance. The funds were used to buy around 5,000 BTC. The price of Bitcoin at the time was $45,300.
Terraform Labs’ co-founder, Do Kwon, previously said that Terra’s non-profit organization, the Luna Foundation Guard, is planning to raise the company’s Bitcoin reserves to $10 billion.
The Luna Foundation Guard currently has, according to OKLink, 35,767.98 bitcoins reserved. The total value of LFG’s BTC holdings surpasses the $1.6 billion mark.
Terra USD (UST), at the time of writing, is the fourth largest stablecoin and the 14th largest cryptocurrency with a market cap of more than $16 billion, according to CoinMarketCap.
Terra plans to challenge DAI
Terraform Labs partnered with Frax Finance and Redacted Cartel in a move that could potentially challenge the fifth-largest stablecoin, DAI, in terms of liquidity. “By my hand, DAI will die,” Kwon tweeted on March 23.
To achieve a clear win over DAI, Kwon would have to lure investors from DAI’s 3pool to the new four-token liquidity pool comprised of USD Coin (USDC) and USDT on Curve Finance.
Offering greater incentives with more liquidity could be a way to achieve this.
“In the future, we will also direct emissions to other stablecoins that pair against the 4pool, not just the 4pool itself,” Kwon said. “Goal is to starve the 3pool. [It] shall not be long,” he said.
DeFi analyst and investor Korpi believes that a drop in 3pool’s liquidity won’t “lead to DAI losing the peg.”
“DAI is [a] debt-based stablecoin. To mint DAI, users have to lock collateral in MakerDAO vaults which is worth much more than DAI issued. As long as collateral [exceeds the] DAI issued, DAI won’t lose $1 peg. It may become more volatile with lower liquidity but de-peg is highly improbable,” he said.
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