Do Kwon, Founder and CEO of Terraform Labs, recently made headlines with an announcement to purchase billions of dollars worth of bitcoin in order to establish “decentralized forex reserves” for UST, Terra’s algorithmic stablecoin.
In this episode of The Scoop, host Frank Chaparro and Kwon discuss the details of Terra’s bitcoin reserves and unpack Terra’s plans for unlocking bitcoin’s potential as the new gold standard for digital currency.
As Kwon explained during the interview,
“It stands to reason that bitcoin — being the largest crypto, with the most distributed ownership, the soundest monetary policy — that if bitcoin were to get a credible ‘layer two’ in one of the largest smart contract platforms in the world, then in that case its status as a reserve currency — sort of ‘the bitcoin standard’ if you will, being used to back stablecoins, backing DAOs, backing lots of different DeFi applications — could actually come to fruition.”
While the move could enhance the stability of UST’s peg to the dollar, Kwon also believes it speaks to how the future of crypto could operate multi-chain.
In such a future, Kwon hopes utilizing bitcoin as a sort of gold standard will help facilitate adoption of UST across various blockchains.
With a market cap of over $16 billion, UST is the largest decentralized stablecoin. However, data from Terra Bridge shows that only just over $1 billion UST has been moved into other ecosystems.
This is something Kwon would like to change. As Kwon explained:
“We believe that Terra UST has the chance to be the largest stablecoin across multiple different blockchains,” Kwon said. “Not just the largest stablecoin on the Terra blockchain.”
While tribalistic attitudes frequently pit community members of competing smart contract ecosystems against each other, Kwon believes this is something that the new ‘bitcoin standard’ for UST can transcend:
“What anyone in crypto finds difficult to question is the soundness and the quality of bitcoin as collateral backing a stablecoin. So I think as Terra UST becomes heavily backed by bitcoin, I think it’s going to build more bridges and make it easier for Terra UST to expand to different ecosystems.”
The Luna Foundation Guard (LFG) — the non-profit entity responsible for maintaining UST’s peg to the dollar — has already purchased over $1 billion in bitcoin, and plans to continue purchasing bitcoin as UST grows.
As Kwon mentions during the interview, “The future model of Terra $UST is that a certain percentage of new UST that is being minted goes to buy bitcoin all the time to build up reserves.”
During this episode, Kwon and Chaparro also discuss:
- Online property rights
- Value capture in the metaverse
- Global “de-dollarization”
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Source: https://www.theblockcrypto.com/post/139871/how-bitcoin-is-becoming-the-new-decentralized-gold-standard-according-to-terraform-labs-do-kwon?utm_source=rss&utm_medium=rss