Terra founder explained that he is looking at bitcoin as a long term reserved fund for stablecoin UST.
Terra network’ blockchain is inclined to the payment system and innovation in the financial system with the blockchain technology. Terra is also known for its stablecoin UST. The native toke of Terra is Luna, which is standing at 9th rank by 24 hours crypto trade volume.
Recently Terra founder & Terraform Labs CEO Do Kwon notified the Terra community that Terra pledged to hold $10 billion worth of Bitcoin as a reserved fund behind its stable coin.
On 29 March, During the interview discussion with Unchained podcast, Terraform Labs CEO was asked by the host about his opinion on “the short-term implications of holding so much BTC will be for the stability of UST”.
On this Kwon said that the worst scenario may take place when Terra will buy Bitcoin and after 6 months Bitcoin will crash and also, as a result, demands of UST will go down. He noted that such situations may not keep his initiative to night.
“I’m sort of betting that the long-term scenario of Bitcoin going up and the reserves being strong enough to withstand UST demand drops is the more likely scenario.”
On these things, danku_r, a YouTuber, shared his stance and claimed that decisions to reserve Bitcoin behind the UST stablecoin will not back UST, instead, it will swallow the supply of UST contraction.
Under the systematic plan of Terraform Labs, they are aiming to reserve 40% of the reserved funds of UST in the form of Bitcoin. They are holding a total of 30727.9 BTC and most recently they purchased 2,943 BTC on 29 March.
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