A $10 billion bet

Backed by Bitcoin 😎

Do Kwon the founder of Terraform Labs and Terra the Eth layer one competitor is planning on accumulating $10billion worth of Bitcoin to add to the UST stable coin reserves… essentially backing the UST stable coin with bitcoin.

This isn’t theoretical he has already started the accumulation.

What is this Terra/Luna/UST thing?

Luna (LUNA) and TerraUSD (UST) are two native tokens of the Terra Network, a blockchain based project developed by Terra Labs in South Korea of which Do Kwon is the founder / CEO.

The Terra blockchain is built on Cosmos SDK a framework that allows developers to create custom blockchains and build their own decentralized applications on top of Terra for various use cases.

As of now, The Terra ecosystem contains more than 100 of these natively built projects. These include non-fungible token (NFT) collections, decentralised finance (DeFi) platforms and Web 3 applications.

Who Do Kwon Tho?

Do Kwon is a former Stanford University computer science grad who has been in the ecosystem and on “watch” as an influential character in the crypto space writ large for the last few years. He has obviously started to become increasingly more influential as Luna’s price has soared and his plans are starting to unfold.

So who cares about another shitcoin?

Well, here is the interesting part, normally we wouldn’t give a shit as most altcoins do not have the fundamental foundations that bitcoin has regarding decentralisation of the protocol. Bring in UST from Terra.

What is UST and how does it work?

Stablecoins are a specific type of cryptocurrency whose price is pegged mostly to state issued fiat currencies like the Dollar, Pound, Euro. Now this is where UST(Terra’s Stablecoin) gets vastly more interesting compared to other Stablecoins (USDT / Tether etc)

Instead of relying on a set of reserve assets to maintain the peg UST uses a smart contract based algorithm to keep the price of UST anchored to $1 by burning (permanently destroying) LUNA tokens in order to mint (create) new UST tokens

OK BREATH…. we will keep things simple going forward

There is a lot going on under the hood with arbitrage and technicality to make the above work that we do not want to deep dive and bore your face off with in here.

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Get to the point!

Terra’s LUNA UST token is backed by BITCOIN 😎

The foundation behind the UST token, the non-profit supporting the Terra Network LFG (Luna Foundation Guard) from Singapore, is using the reserves to buy Bitcoin to back the UST token giving it some unique properties unlike any other Stablecoin which is subject to centralised control and regulatory issues.

UST is essentially becoming the first stablecoin (stable currency) that will be implemented on-top of a Bitcoin Standard. Essentially Bitcoin, not a fiat currency, is setting the monetary policy.

The Wealth Gap View

Do we care about Luna or Terra, not particularly! Do we admire this action to create and utilise the foundation of Bitcoins core characteristics and decentralised stance to then build other ecosystem elements on top of it … Hell yeah we do!

Fix the Money, Fix the World

Here is the best part, to achieve this Terra / LFG foundation will continue to buy and reserve bitcoin to the tune of $10billion. This takes more bitcoin, the world’s most scarce asset, off the market. This will drive up the BTC network value and price.

Luna won’t be the last to implement this practice either as we drive to a Bitcoin Standard world.

Oh, by the way, they have already started buying hard ($1.4 billion as of writing) and its already reflecting in the market.

The beauty of Bitcoin and the blockchain is we can Fact Check everything unlike in today’s broken ass societal structure. We give you the LFG wallet above which currently has 30,727 Bitcoin in it 😎

Another $8.6 billion incoming and this is just one actor in the “collecting bitcoin” game.

Still Bearish?

Till Next Time

The Wealth Gap Team