The Luna Foundation Guard, a subsidiary of Terra, has made a massive Bitcoin acquisition, with the aim of linking Bitcoin to the UST stablecoin.

Do Kwon, founder of Terraform Labs, recently stated that he is ready to become the second largest holder of Bitcoin after Satoshi Nakamoto.

However, many people are apprehensive about future liquidity amid the massive accumulation of Bitcoin by a single entity.

To address these concerns, Do Kwon said Bitcoin is liquid enough to handle any potential depegging of the UST stablecoin.

During an interview withBloombergYesterday, Monday, April 4, “Do Kwon” said:

People need more confidence in cryptocurrencies.

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If you look at bitcoin, it’s generating over $20 billion a day and I think over time, it will become more liquid.

Even if a stable currency is depegged over time, those reserves will be used to defend that peg.

I think the bitcoin market will easily be able to absorb the bitcoin entering the market.

Terra plans to acquire $10 billion worth of bitcoin as a reserve for its decentralized stablecoin UST.

The Luna Foundation Guard has already completed a $1.5 billion bitcoin purchase last month.

The digital stablecoin TerraUSD (UST) takes a different approach:

UST Terra’s original stablecoin is currently the third largest by market cap.

But unlike the top two stablecoins USDT and USDC, TerraUSD (UST) takes a different approach.

USDT and USDC are a centralized stablecoin in a way that is directly linked to a fiat currency.

On the other hand, Terra’s UST stablecoin maintains its peg by burning the LUNA cryptocurrency.

While bitcoin reserves will help UST’s ability to maintain its peg to the dollar.

“Do Kwon” explained:

The important thing to remember about Terra is that it is a decentralized stablecoin, meaning that it has no issuer.

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If you have some sort of centralized collateral…bond, or Tether stablecoin, or USDC, in that case, whoever holds the largest amount of these reserves will be scrutinized, defeating the whole purpose of having a decentralized stablecoin in the first place.

Currently, LUNA is one of the best performing cryptocurrencies in the market.

The price of LUNA has risen more than 100% over the past month since the Luna Foundation Guard started buying bitcoin.

As of the time this article was published, LUNA is trading near an all-time high of $117 and still ranks as the 7th largest cryptocurrency with a market cap of $41 billion.

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