Terraform Labs CEO Do Kwon confirmed on Thursday that the Luna Foundation Guard (LFG) expanded its reserves by another 37,863 BTC, or approximately $1.5bn.
Of that, the equivalent of $1bn was transferred in an over-the-counter swap facilitated by the digital currency prime broker Genesis. Speaking with the CNBN, Genesis’ head of derivatives Joshua Lim stressed that the transaction represented more than just economic interest, contributing to the bridging of gaps across the crypto community.
The remaining bitcoin the LFG acquired in this round, worth $500m, was purchased via the crypto hedge fund Three Arrows Capital (3AC).
Following the recent transactions, the reserves now hold approximately $3.5bn worth of bitcoin and other cryptocurrencies, including LUNA and AVAX. The recent transactions make the LFG the second largest corporate bitcoin owner, a position previously held by Tesla.
The top spot invariably belongs to MicroStrategy, the company of a prominent Bitcoin advocate Michael Saylor, which as of this writing owns over 127,000 BTC.
Bitcoin treasury reserves
The Luna Foundation Guard was formed as a non-profit subsidiary of Terra to “support decentralization” and “foster the growth of the Terra ecosystem,” but Do Kwon makes no secret of the fact that the LFG’s primary role is buying bitcoin to backstop the dollar peg of Terra’s algorithmic stablecoin UST.
Asked for comment by the CNBN, Do Kwon said that UST is the first "pegged currency that is attempting to observe the bitcoin standard," noting that the process of accumulating bitcoin to defend the UST is symbolic of the wider crypto ethos, notably "self-organizing to try to bring systems back to a sounder paradigm of money."
Revealing the details
The goal is to acquire $10bn worth of bitcoin to prop up the price of UST in case the peg breaks down. According to Do Kwon, the process should be complete by the end of the third quarter.
The details concerning the deployment of the Bitcoin reserves on the Terra blockchain have not yet been clarified. Members of the Terra community are currently discussing some options, notably a rapid BTC liquidity pool design by Jump Crypto, which also partnered with Terra’s governance protocol Retrograde.