The Luna Foundation Guard (LFG) just made its biggest Bitcoin purchase yet: 37,863 coins, worth $1.5 billion at the time of writing.
That nearly doubles the Guard’s previous reserves from 42,530.82 BTC up to 80,394 BTC. The group reportedly facilitated the purchase by swapping $1 billion in UST stablecoin for Bitcoin with Genesis Trading, while completing another $500 million over-the-counter purchase with help from Three Arrows Capital.
This purchase brings Terra’s total reserves to more than $3 billion, the bulk of that in Bitcoin. It holds smaller shares of LUNA, AVAX, and USDT and USDC stablecoins.
The LFG is a foundation established to guide the development of the Terra network and its burgeoning ecosystem. Its reserve is intended to provide backing for Terra’s own stablecoin, TerraUSD (UST)—currently the third-most-valuable stablecoin on the market, trailing only USDT and USDC while slightly edging out BUSD.
Stablecoins are a form of cryptocurrency whose value is pegged to a fiat currency of relatively “stable” value—often the U.S. dollar. TerraUSD is an algorithmic stablecoin, meaning it derives its value not from physical assets in a bank but via its relationship to Terra’s floating-value cryptocurrency, LUNA. The reserves are intended for use should that algorithmically derived peg break down.
Terra co-founder Do Kwon sees the transition to Bitcoin backing as being in the best interest of UST’s long-term price stability.
“For the first time, you’re starting to see a pegged currency that is attempting to observe the bitcoin standard,” said Kwon, according to CNBC. “It’s making a strong directional bet that keeping a lot of those foreign reserves in the form of a digital native currency is going to be a winning recipe.”
Kwon said that he expects Terra to raise reserves up to its long-term goal of $10 billion by the end of the third quarter. With its current holdings alone, Terra is already within the ranks of the top 10 largest Bitcoin addresses–even though on-chain data doesn’t reflect that at the time of writing. LFG’s publicly displayed reserves are also awaiting an updated figure.
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