Terra Is Planning To Add $10B In Bitcoin Reserves

One of the best performing altcoins of the past month Terra’s (LUNA) co-founder Do Kwon said he plans to add $10 billion worth of Bitcoin (BTCUSD) to the project’s reserves. In early March, it was reported that Terra surpassed Ethereum to emerge as the second-largest staked asset among major cryptocurrencies. LUNA is the second-largest DeFi protocol behind Ethereum.

According to Benzinga, Kwon announced the move on Twitter, saying that Terra, valued by many for its having huge Bitcoin reserves, will “open a new monetary era of the Bitcoin standard.” He added that the reserve Bitcoin would be used to backstop short-term redemptions of TerraUSD — the U.S.-dollar value pegged stablecoin of the Terra blockchain — and for a decentralized foreign exchange reserve. The move that demonstrated Terra’s intention to stay for long, was widely welcomed by crypto investors.

Furthermore, Kwon said the blockchain platform will not sell LUNA to build the Bitcoin reserves, which means current investors won’t be diluted in their LUNA holdings. Last week, Kwon had announced that Terraform Labs (TFL) donated 12 million LUNA to the Luna Foundation Guard (LFG) and said that the project will keep growing reserves to “de-peg risk for TerraUSD.”

To understand why Terra’s ecosystem has been gaining so much traction for such a long time, we must first understand the team and founding philosophy behind Terra. Terra’s co-founders Do Kwon and Daniel Shin both went through YCombinator which has incubated leading technology companies like Stripe, Airbnb (ABNB), and Coinbase (COIN) and understood that user experience and adoption were the most important metrics for many DeFi projects.

They realized that a big barrier to entry for many newcomers was that too many crypto projects were too technically complex to understand and easily intimidated users. Rather than throwing all the complexity of DeFi at users, they instead wanted to build an ecosystem that offered a user friendly portal into DeFi.