[Blockmedia Changhwan Choi] Terraform Labs(TFL) founder Do Kwon has outlined a future plan to accumulate $10B+ $BTC(Bitcoin) reserves for $UST(TerraUSD). It is the dream of Bitcoin maximalists that $BTC becomes the reserve currency of the world. Bitcoin maximalists believe this dream will come true.
Due to inflation caused by the government’s lax monetary and fiscal policy, Bitcoin, which has a characteristic of scarcity with limited issuance, is considered that it can be developed into digital gold.
It is believed that $BTC will develop into a reserve currency held by the state that guarantees the value of safe assets and Fiat Money among Bitcoin Maximalists.
But for now, Bitcoin moves in the same direction as NASDAQ rather than gold and is more volatile. Rather than reserve currency, it is treated as a risky asset in the market.
El Salvador has adopted Bitcoin as a legal currency and received support and cheers from the Bitcoin community, but suffering from checks by international financial organizations such as the IMF.
Terra appeared in this situation. CEO Do Kwon emphasized that Terra will have $10B+ $BTC reserves and open “New monetary era of the Bitcoin($BTC) standard” The new currency era, in which Bitcoin is the standard, is the world that Bitcoin maximalists dream of.
Terra’s stable coin, $UST, is different from other stable coins. Tether($UDT) and Circle’s $USDC(USD Coin) issue dollars and securities as collateral. There must be physical collateral, and sometimes they are suspected of being insufficient.
$UST is a mathematical algorithmic coin without collateral. If the $UST price rises above $1, users exchange Terra’s native coin $LUNA(Terra) for $UST.
On the contrary, if it falls below the fixed price, $UST holders will receive $LUNA and sell $UST.
Some argue that the price drop of $UST and $LUNA will cause a chain reaction, threatening the ecosystem. CEO Do Kwon guaranteed that Terra would purchase $BTC and build it as a reserve asset until it becomes impossible to claim that a price drop causes a chain reaction.
Although pricing is based on algorithms, Terra will eliminate risks at all by accumulating a large amount of bitcoin as a reserve asset to solve people’s doubts. $UDT and $USDC’s reserve asset is US dollars, and $UST’s reserve asset is $BTC.
A new reinforcement “Terra” armed with mathematics(smart contracts and algorithms) has emerged in the Bitcoin camp.
Terra ecosystem is growing rapidly with various projects such as Anchor Protocol, which ranked 1st in DeFi loans, and Mirror Protocol. In addition, $UST’s issuance volume is also increasing rapidly. In terms of growth rates, it is overwhelming $UDT and $USDC.
Bitcoin emphasizes the value of personal freedom and property protection through the P2P principle, but has not been able to respond to the development of new technologies such as DeFi.
However, $UST, which is considered to be technologically advanced among stable coins, has declared that they will use Bitcoin as a reserve asset/key currency in their world. Bitcoin is gaining strong support.
The market sees regulatory risk as one of the biggest risk factors to the future of Terra. One of the reasons why Bitcoin maximalists criticize Altcoin as a “shit-coin” is because of regulatory risks.
The policy of the authorities can determine the fate of coins. Bitcoin is fundamentally impossible for the authorities to ban except investment regulations, while other coins can be in danger of survival.
Terra is in a confident position, contrary to other projects being swayed by the authorities. Terra founder Do Kwon is in a legal dispute with the U.S. Securities and Exchange Commission over whether mirror protocol’s synthetic assets are unregistered securities.
After receiving the summons, he refused it and filed a lawsuit that the summons was invalid. The Southern District Court of New York has ordered Terra and CEO Do Kwon to comply with the SEC’s summons.
In this regard, CEO Kwon said, “Regulatory authorities can control centralized subjects such as app stores and websites, but it is difficult to control Terra, which has established a decentralized system since birth and involves more than 3 million accounts.”
He argues that “Terra did not mine tokens in advance for financial gain, it only helped investors trade synthetic assets”
Terra is a rising ecosystem of new decentralized finance (DeFi) based on decentralized smart contract and algorithm-based coin $LUNA and $UST. Bitcoin community is looking forward to the success of the Bitcoin Alliance with $BTC and $UST.
