Terra co-founder, Do Kwon declared that he is poised to overtake Satoshi Nakamoto as the second-largest Bitcoin holder. However, many people are concerned about future liquidity in the middle of a single corporation’s vast accumulation.
In response to these concerns, Do Kwon argued that Bitcoin is “liquid” enough to withstand any hypothetical de-pegging of its UST stablecoin.
Terra co-founder, Do Kwon stated in an interview on Monday, April 4:
“People need to have a little more trust in cryptocurrencies. When it comes to Bitcoin, it is worth more than $20 billion each day. He believes that it will become even more liquid in the future. Even if a stablecoin depreciated over time, the reserves would be utilized to protect the peg. He believes that the Bitcoin market will simply absorb any Bitcoin that enters the market.”
Terra intends to hold $10 billion in Bitcoin as a reserve for its decentralised UST stablecoin. Last month, the Luna Foundation Guard completed a $1.5 billion Bitcoin acquisition.
TerraUSD’s (UST) distinct approach
LUNA has been one of the best-performing cryptocurrencies on the market. Since the LFG began acquiring Bitcoin, the LUNA price has soared by more than 100 percent in the last month.
Terra’s native stablecoin, UST, is now the third-largest in terms of market capitalization. However, unlike the top two stablecoins (USDT and USDC), TerraUSD (UST) adopts a unique approach.
USDT and USDC are centralised stablecoins that are directly tied to fiat currencies. By burning LUNA tokens, Terra’s UST stablecoin maintains its peg. A Bitcoin reserve will help UST maintain its currency peg even more firmly.
Kwon elaborated:
“It’s vital to understand that Terra is a decentralised stablecoin in the sense that there is no issuer. If people were holding some form of centralised collateral such as bonds, Tether stablecoin, or (Circle’s USDC), whoever had the most of these reserves would be vulnerable to censorship, defeating the entire premise of having a decentralised stablecoin in the first place.”
