Terra wants to back its stablecoin UST with USD $10 billion in Bitcoin – DiarioBitcoin

Terra wants to back its stablecoin UST with USD $10 billion in Bitcoin - DiarioBitcoin

Terra wants to back its stablecoin UST with USD $10 billion in Bitcoin - DiarioBitcoin By DailyBitcoin Editor

The Terra founder announced on Twitter his intentions to back UST not only with Luna, but also with Bitcoin.

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Do Kwon, the founder of landpublished in Twitter its intention to support the stablecoin of Terra, USTnot only with the own cryptocurrency, Moon, but also with BTC. Nothing more and nothing less than USD $10 billion in Bitcoin.

“$UST with $10B+ in reserves in $BTC will open a new monetary era of the Bitcoin standard.

P2P electronic cash that is easier to spend and more attractive to hold #btc”

In another subsequent tweet he added:

“Bitcoin is expendable freedom.

And $UST makes that freedom easier to spend and more attractive to hold.”

Movements towards Bitcoin

About, Trusnodes write today that a safe address of gnosis which supposedly belonged to Moon moved $125 million worth of connection tokens. The address reportedly held close to $2 billion in UST and USDc, of which $125 million was recently moved to what appears to be an address of Binance. The movement also coincided with the initial increase in the price of Bitcoin today.

Depending on the version of trustnodes; the project would presumably be doing what it did MakerDAO: diversify the assets that stabilizedan DAI, in this case, starting with Bitcoin.

Apart from the comments on Twitter, Earth has not made any official statement. In fact, the same CEO recognized in Twitter who said “mmore than it should.”

According to Trustnodes, instead, they may also have deemed it necessary for the funder to disclose it beforehand so as not to break any laws and regulations. Or, alternatively, they may have thought their movements would be tracked, and thus, in order not to cause unwanted speculation, they may have unofficially clarified their plans to buy billions of bitcoins.

Although today it is down 2%, according to data from CryptoMarkets, Yesterday MOON was one of the cryptos that skyrocketed, along with avalanche and Solariumbased on our price report yesterday.

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pomp analyzes

Crypto analyst, Anthony Pompliano, Pomp, posted on The Pomp Letter an analysis of the situation Earth.

He begins by referring to algorithmic stablecoins, which he refers to as “inherently fragile. It says that these unsecured digital assets, which attempt to price a benchmark asset using financial engineering, algorithms and market incentives, “They are not stable at all, but exist in a state of perpetual vulnerability. Iterations to date have struggled to maintain a stable link, with some failing catastrophically.”

Then he refers to the case of land what “is undergoing a transition from a dollar-pegged stablecoin to a Bitcoin-backed stablecoin.”

Account that the stable currency at the heart of this ecosystem, TerraUSD (known as UST), has a market capitalization of over USD$15 billion and is the fourth largest stablecoin in the market behind Tether, USDC and BinanceUSd

“Based on a recent conversation with members of the Terra community, there is roughly $100 million to $200 million of new UST demand per day. UST is not only big, but also growing rapidlyit says.

Explain what MOON is the native staking token of the ecosystem Earth. “The purpose of LUNA is to absorb the price volatility of fiat-pegged stablecoins, along with their use in governance, mining, and staking. A simple framework for evaluating LUNA is that “the more Terra is used, the more LUNA is worth”.

He explains that currently if someone wants ust, has to burn MOON. For every $1 of UST the person seeks, they have to burn $1 of LUNA. This burning mechanism is similar to a share buyback, she says.

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So you ask what is Terra going to do differently with the UST trailer? And he answers: “is going to back UST with Bitcoin.” And reports:

There is roughly $3 billion worth of Bitcoin, Tether, and LUNA in the Luna Foundation’s reserves today. They are slowly converting most of this into bitcoin. As for new issues, the Terra team will refrain from having market participants burn 100% of their LUNA when searching for UST.”

Instead he says, earth can burn 60% of MOON and use 40% to buy Bitcoin. And says:

This dual strategy begins to slowly add a Bitcoin backing to the UST stablecoin that is in circulation.

In addition, he comments: “The math shows that UST will not be 100% backed by Bitcoin initially. The idea is that over time, the price of Bitcoin will continue to rise and eventually line up with the outstanding value of UST. There is a high probability that Bitcoin backing will exceed the value of UST for a long enough period of time.”

persistent buyer of Bitcoin

Pomp adds that land is becoming a persistent buyer of Bitcoin. “They are slowly buying $3 billion worth of bitcoin from the Luna Foundation reserves. This is being done through aggressive buying on falling prices. Terra will then be a persistent, daily bitcoin buyer based on the new issuance mechanism I just described. You can think of Terra as new demand for Bitcoin that will be measured in the tens of millions of dollars per day to start.”

Secondly, land highlights the opportunity of assets backed by Bitcoin. Quote Do Kwon from earth, who has repeatedly expressed his belief that Bitcoin it’s a pristine guarantee. “The move to back UST with Bitcoin creates a symbiotic relationship, allowing UST to have confidence that the asset is backed by the most superior collateral,” Pomp concludes.

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Likewise, Pomp says that, with this, Bitcoin gets a believable layer two on Terra, one of the largest smart contract platforms in the world. However he thinks this evolution of Terra and Bitcoin’s role as collateral does not come without risk.

Finally, consider that land is “pioneered an idea for bitcoin-backed currencies that has been discussed by bitcoiners for a long time.”

Ends:

“Regardless of how this situation plays out, Terra’s move to back UST with bitcoin is worth paying attention to. There is a lot of risk, but if they succeed, they will create a playbook for other stablecoins and/or central banks to follow. Bitcoin is a decentralized digital currency that has successfully achieved the necessary properties to serve as superior collateral.”

Sources: The Pomp Letter, Trustnodesarchive

Translation and version of DailyBitcoin

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WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.

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