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Luna Foundation Guard Adds Another $100 Million in Bitcoin to Back Terra

Posted by Andries Van Tonder on April 14, 2022 - 8:13am

Luna Foundation Guard Adds Another $100 Million in Bitcoin to Back Terra

The nonprofit is converting stablecoin reserves from LUNA into BTC.

By Andrew Throuvalas

Terra's native cryptocurrency is called LUNA.

The Luna Foundation Guard (LFG) on Tuesday bought 2,508 Bitcoin, worth about $100 million, as part of a plan to amass $10 billion worth.

The LFG is a nonprofit organization responsible for building the reserves that back Terra's dollar-pegged stablecoin, TerraUSD (UST). Nearly $17 billion worth of the cryptocurrency has been issued so far, making it the 14th largest digital asset by market cap

The entity’s former reserve model backed the stablecoin algorithmically using the protocol’s native cryptocurrency, Terra (LUNA), currently the ninth-largest at present. (A dollar of LUNA was redeemable at any time for one TerraUSD, and vice versa.)

However, as Terra co-founder Do Kwon noted last month, LUNA faces price stability issues that hurt its function as a reserve asset.

As such, the organization is now opting to back its stablecoin primarily with Bitcoin. In an interview last month with Bitcoin evangelist Anthony Pompliano, Kwon called the primary cryptocurrency “the soundest and most credibly neutral asset in the digital asset space.”

Though Bitcoin still faces daily volatility, its price movements generally are less erratic than the altcoins beneath it (excluding stablecoins). In the long term, some investors expect the asset to function like “digital gold” thanks to its reliable supply cap of 21 million.

Today, the LFG holds about $2.3 billion in its reserves, with about three-quarters of that Bitcoin. The remainder is split across USDC, USDT, and a tiny amount of LUNA.

With its rate of accumulation, LFG is well on its way to surpassing MicroStrategy’s Bitcoin holdings. The business intelligence company, which has 129,000 Bitcoin on its balance sheet, last week bought Bitcoin for the first time in two months using a Bitcoin-collateralized loan

By contrast, the LFG only just finished purchasing $112M in Bitcoin on April 10, according to on-chain data. As recently as March 26, Terra’s Bitcoin address held less than $1 billion.

Andries Van Tonder thank you Otto
April 15, 2022 at 8:43am
Andries Van Tonder thank you for reading it Adonel
April 15, 2022 at 12:59am
Adonel Lowings Great info Andries. Thanks for sharing
April 14, 2022 at 7:24pm
Andries Van Tonder agree with you Simon, thanks for reading it
April 14, 2022 at 11:48am
Andries Van Tonder thank you Barbrin
April 14, 2022 at 11:48am
Simon Keighley That's a significant amount of bitcoin purchased to back Terra's dollar-pegged stablecoin. Thanks for sharing the news, Andries.
April 14, 2022 at 10:22am
Barbrin van Tonder Great info Andries thanks for sharing this crypto news
April 14, 2022 at 8:42am
Corneliu Boghian good info , thanks for sharing
April 14, 2022 at 8:37am