Terra’s Bitcoin Reserves Hit $1 Billion Following Aggressive Buying On Price Dips
As of Saturday, 26th March, the network had accumulated a total of 15,390.9 BTC, bringing its total holdings to 24,954.95 BTC ($1,108,077,140.35). Terra, which is now the 40th largest BTC holder in the world plans on wrapping on Cosmos and depositing them in smart contracts supporting the algorithmic UST stable coin, with more purchases on the way.
The purchase comes days after Do Kwon, founder of Terra and Terraform Labs announced that his firm was planning on purchasing Bitcoin worth $10 billion to back its UST stablecoin as part of its bigger strategy to decouple from centralized stablecoins while creating a more “sustainable and organic” stablecoin.
Amazing! I use cosmos a lot and subsequently UST since Terra enabled IBC. I’ve been meaning to look into how UST works but haven’t had time as there’s 20% yield available on it via Anchor protocol I think.
As we see, it was unsustainable, once the reserves lost a lot of value.
That’s why it is really important to properly design the reserve currency of an ecosystem. At the end of the day, Intercoin is actually backed by all the goods and services it can be exchanged for. Not by speculative assets with 1% utility and 99% collective belief in their current price as a “store of value”. That collective belief can erode, despite persisting for a while. GameStop and AMC for example rose to new highs, without the fundamentals changing. The fundamentals are what matters … people will need goods and services, regardless of the fed’s interest rates. Yes, the cost of goods and services may drop as automation increases their production, but that’s a far more gradual process than a bubble of speculation popping.
“Backing” a currency by a lot of speculative assets, valuable papers, etc. can cause it to all implode, especially if it’s highly leveraged like CDOs were in the housing bubble, or perhaps like the real estate market in China now (with Evergrande etc.)
Chorus One and Figment, two leading staking infrastructure providers for numerous proof-of-stake (PoS) cryptocurrencies, have announced that they will not be supporting the Terra2.0 launch.
The Chorus One team has taken to Twitter to reveal that it’ll not be supporting the Terra2.0 project as a genesis validator, as it observed a number of irregularities in the governance process, despite its strong belief that the current Terra Rebirth Proposal 1623, is a legitimate path forward for the project.