{"id":16983,"date":"2023-01-20T22:56:41","date_gmt":"2023-01-20T22:56:41","guid":{"rendered":"https:\/\/scienceandnerds.com\/2023\/01\/20\/terras-founder-plans-to-back-its-stablecoin-with-a-basket-of-cryptocurrencies\/"},"modified":"2023-01-20T22:56:43","modified_gmt":"2023-01-20T22:56:43","slug":"terras-founder-plans-to-back-its-stablecoin-with-a-basket-of-cryptocurrencies","status":"publish","type":"post","link":"https:\/\/scienceandnerds.com\/2023\/01\/20\/terras-founder-plans-to-back-its-stablecoin-with-a-basket-of-cryptocurrencies\/","title":{"rendered":"Terra\u2019s founder plans to back its stablecoin with a \u2018basket\u2019 of cryptocurrencies"},"content":{"rendered":"

Source:https:\/\/techcrunch.com\/2022\/04\/06\/terras-founder-plans-to-back-its-stablecoin-with-a-basket-of-cryptocurrencies\/<\/a><\/br>
\nTerra\u2019s founder plans to back its stablecoin with a \u2018basket\u2019 of cryptocurrencies<\/br>
\n2023-01-20 22:56:41<\/br><\/p>\n

\n

In addition to bitcoin, backing stablecoins with other cryptocurrencies could help expand the digital ecosystem<\/h2>\n
\n
\n\t\t\t
\n\t\t\tJacquelyn Melinek\t\t<\/a>
\n\t\t
\n\t\t\t\t\t\t10 months\t\t<\/span>\n\t<\/div>\n<\/p><\/div>\n
\n\t\t\t\n\t\t<\/div>\n<\/p><\/div>\n
\n

There have been<\/span> many headlines in the past few weeks surrounding the choices of Do Kwon, the founder of Terraform Labs, which created the crypto tokens LUNA and stablecoin TerraUSD (UST).<\/p>\n

Kwon previously announced plans to obtain $10 billion in bitcoin for reserves to \u201copen a new monetary era of the Bitcoin standard.\u201d The funds will be used to back UST in a decentralized foreign exchange reserve to keep the value of the stablecoin at a fixed rate.<\/p>\n

On Wednesday, a few hours before speaking to TechCrunch, he casually tweeted<\/a> that he bought $230 million in bitcoin.<\/p>\n

Kwon told TechCrunch Terra has purchased $1.6 billion in bitcoin so far and plans to purchase an additional $1.4 billion with capital from Luna Foundation Guard<\/a>. The Terra protocol will buy the remaining $7 billion of bitcoin through users wanting to mint UST. \u201cUsers would put bitcoin into the reserve and then get UST,\u201d he explained.<\/p>\n

But what\u2019s more interesting is that these bitcoin purchases are just the beginning of Kwon and Terra\u2019s larger road map to expand and integrate the stablecoin deeper into the crypto ecosystem.<\/p>\n

Kwon plans to back UST with other Layer 1 (L1) blockchains like Solana and Avalanche, to name a few, in the short term.<\/p>\n

\u201cWe\u2019re big believers of Bitcoin, so we\u2019re just going to continue to buy whenever there\u2019s an opportunity to,\u201d Kwon said. \u201cOvertime, Terra is going to be backed by a basket of the top Layer 1 assets.\u201d<\/p>\n

He did not clearly note which L1s that would entail, but he said that bitcoin will remain the dominant reserve for UST. \u201cI don\u2019t think we\u2019ll have covers of all the ecosystems within the next few weeks, but we\u2019ll turn on reserves for a few of the popular ones,\u201d Kwon said.<\/p>\n

There is a circulating supply of 16.72 billion UST in the market and the current volume of the stablecoin is $672 million, up 9.2% in the past 24 hours, according to data<\/a> on CoinMarketCap at the time of publication. UST is the 14th largest cryptocurrency by market capitalization.<\/p>\n

As the Terra ecosystem begins to grow substantially within other L1s like the Avalanche blockchain, for example, then there\u2019s a possibility that UST will be backed by a lot of Avalanche\u2019s token, AVAX, he said.<\/p>\n

\u201cIf you\u2019re minting UST on Avalanche, you would trade in AVAX instead of bitcoin and that will in turn improve the size of AVAX reserves,\u201d he said.<\/p>\n

By adding other types of collateral, it will expand the potential user base of Terra stablecoins, he said. \u201cFor example, if Terra stablecoins were the largest consumer of SOL [Solana] or AVAX and the reserves are that large, then there\u2019s an inherent alignment with the user base from each of those ecosystems.\u201d<\/p>\n

Even though the \u201cshare of the pie\u201d that Luna takes home gets smaller, the approachable market will get significantly larger, he said.<\/p>\n

Stablecoin\u2019s growth is anything but stable<\/h2>\n

Stablecoins get their name from the fact that they are \u201cstable\u201d through a 1:1 ratio that pegs their value to an external reserve, typically U.S. dollars, but can also be tied to other assets, like UST is with bitcoin. This means every stablecoin in circulation is backed up by $1 held in its relative reserve, whether it be U.S. dollars or another asset.<\/p>\n

The stablecoin ecosystem has expanded dramatically over the past year, and even the U.S. Federal Reserve took note by saying in a January 2022 report<\/a> on the crypto assets that they \u201cexperienced tremendous growth in the past year\u201d and that \u201cstablecoins hold the potential to support next-generation innovations.\u201d<\/p>\n<\/p><\/div>\n

<\/br><\/br><\/br><\/p>\n

Tech, Technology<\/br>
\n<\/br>
\nSource:https:\/\/techcrunch.com\/2022\/04\/06\/terras-founder-plans-to-back-its-stablecoin-with-a-basket-of-cryptocurrencies\/<\/a><\/br><\/br><\/p>\n","protected":false},"excerpt":{"rendered":"

Source:https:\/\/techcrunch.com\/2022\/04\/06\/terras-founder-plans-to-back-its-stablecoin-with-a-basket-of-cryptocurrencies\/ Terra\u2019s founder plans to back its stablecoin with a \u2018basket\u2019 of cryptocurrencies 2023-01-20 22:56:41 In addition to bitcoin, backing stablecoins with other cryptocurrencies could help expand the digital ecosystem Jacquelyn Melinek 10 months There have been many headlines in the past few weeks surrounding the choices of Do Kwon, the founder of Terraform Labs, […]<\/p>\n","protected":false},"author":1,"featured_media":16984,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"pagelayer_contact_templates":[],"_pagelayer_content":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[17,8],"tags":[],"class_list":["post-16983","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tech","category-technology"],"yoast_head":"\nTerra\u2019s founder plans to back its stablecoin with a \u2018basket\u2019 of cryptocurrencies - 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