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- Blockchain protocol Terra is closing in on Tesla’s Bitcoin holdings following another huge purchase
- Terra owner Luna Foundational Guard recently bought another ₿4,130 to take their holdings to ₿39,897.98
- The group hopes that its massive Bitcoin pool will act as backing for its UST stablecoin
Blockchain protocol Terra has taken its bitcoin holdings to almost 40,000, making the company the third biggest public holder behind Tesla and Microstrategy. Terra, whose co-founder Do Kwon has publicly stated he wants to company to own $10 billion worth of the cryptocurrency, recently purchased another ₿4,130 for $176 million to take the company’s holdings to ₿39,897.98, just ₿3,302 short of Tesla’s holding. However, it still keeps the company some $8.31 billion off its target valuation, while doing nothing for the Bitcoin price.
Terra Pushes Towards Long Terms Bitcoin Goals
Terra owns the popular LUNA cryptocurrency as well as the TerraUSD (UST) stablecoin, whose market cap has risen over 475% in the last five months to become the largest algorithmic stablecoin on the blockchain. The entity in charge of the mass bitcoin buyup is Luna Foundational Guard (LFG), a Singapore-based non-profit working on the Terra blockchain, which will use the bitcoin as a reserve asset for UST.
LFG has made several large scale bitcoin purchases in order to reach its short term goal of $3 billion worth of bitcoin, with $1 billion raised via over-the-counter sales of LUNA and another $1.2 billion by selling UST for USDT.
UST Backing Behind BitcoinBTC Buyup
The main reason for the huge Bitcoin pool is as collateral for the UST coin, with algorithmic stablecoins historically faltering due to a lack of funds backing them up. LFG believes that a massive Bitcoin pool will strengthen UST’s peg to the dollar. UST currently maintains its peg via an algorithm that burns or creates LUNA, with no real dollars held by the team.
By maintaining a large bitcoin reserve, LFG hopes to guard against UST collapsing during selloffs and to make it possible for users to redeem UST for bitcoin in an effort to increase faith in the protocol.