The big raise was made through a sale of the LUNA token, which is the native asset of the Terra ecosystem. The funding included participation from the usual round of venture capital giants, including Jump Crypto, Three Arrows Capital, Republic Capital, GSR, Tribe Capital, DeFiance Capital, and a number of angel investors.
On Feb. 22, Terra tweeted that the billion-dollar private token sale is one of the cryptocurrency industry’s largest ones to date. A Bitcoin denominated forex reserve for the Terra UST stablecoin will be established with the sale proceeds.
1/ The long awaited [REDACTED] 💎3 is here!
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) February 22, 2022
The non-profit LFG was set up in Singapore in January to help manage and grow the Terra ecosystem which is the ninth-largest in terms of market capitalization at the time of writing.
Backing UST with BTC
Terra’s UST stablecoin (TerraUSD) is currently the fourth largest stablecoin in the industry, with a market cap of $12.3 billion. Its supply has grown by almost 2,000% since the same time last year, enabling it to surpass DAI.
UST is an algorithmic stablecoin with supply growing and shrinking in response to demand. The Terra team pointed out that one common criticism of algorithmic stablecoins is their “reflexive nature and the hypothetical risk of a ‘bank run’ scenario.” This has already occurred with other DeFi stablecoins based on similar mathematics. Terra stated that a reserve will help to alleviate such circumstances:
“A decentralized Reserve can provide an additional avenue to maintain the peg in contractionary cycles that reduces the reflexivity of the system.”
The reserve will initially use BTC, but there are plans to stock it with other non-correlated assets over time. The LUNA tokens purchased by the VC companies will be locked up for a four-year vesting period.
Earlier this month, Terra announced a partnership with Major League Baseball’s Washington Nationals.
LUNA Price Pumps
LUNA prices have reacted to the news with a 14.5% surge over the past 24 hours. At the time of writing, the token was trading at $56, wiping out all losses over the past week, according to CoinGecko.
LUNA has still taken a 20% hit over the past month, however, and is currently trading down 46% from its Dec. 27 all-time high of $103.
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.
Download MAXBIT Android App, Your best source of all crypto news!
Share this article: