Terra Founder Hints at $3 Billion Bitcoin Purchase

Do Kwon, founder of erra, suggested that a future purchase worth $3 billion of bitcoin could be made to replenish the protocol’s reserves in a Twitter Space shared by Udi Wertheimer. Do Kwon also explained the new Terra ecosystem mechanics in which bitcoin can be used as collateral for its flagship stablecoin, UST.

Do Kwon directs the Terra Ecosystem towards Bitcoin

Do Kwon (founder of Terraform Labs and Terraform Labs) made important announcements about the future of Terraform Labs and its tokens during a Twitter Space hosted Udi Wertheimer. One of these announcements is about the inclusion of new token mechanisms that consider some form of Bitcoin in the Terra ecosystem. Kwon stated that Terra is working to bring a tokenized form of bitcoin to Terra’s blockchain in the decentralisedest form.

Kwon explained that UST will become a hybrid stablecoin by including bitcoin. Users can exchange $1 worth UST for $0.99 of BTC. Users would be able to redeem BTC using UST at a premium of 1%. This is similar to how LUNA is used now. Kwon stated that the mechanics of this will be explained in greater detail in the near future.

Kwon answered a question about why Terra decided to use bitcoin as a reserve currency.

There are a few reasons, but bitcoin is the only hard reserve currency that has been proven out of digital currencies… It is extremely difficult for someone in crypto to question bitcoin.

Bitcoin Explosion

Kwon believes that the Terra ecosystem’s tokenized bitcoin will become the de facto reserve cryptocurrency of many protocols. It will also be used in smart contracts and other applications that hold treasuries. Kwon provided some numbers about the amount of Bitcoin Terra will buy in the near term. Terraform Labs CEO, Kwon, stated that the company has a budget of $3 billion to purchase bitcoin in the near future and also said that the majority of the bitcoin has yet not been purchased.

Do Kwon ended by revealing that the protocol through the Luna Foundation Guard plans to become a regular purchaser of bitcoin for the above purpose.