Do Kwon, CEO of Terraform Labs, has admitted that a drop in the price of Bitcoin (BTC) will be "bad" for the sustainability of the TerraUSD (UST) stablecoin, but that he anticipates Bitcoins to rise.
Terraform Labs is the organization behind the Terra blockchain platform, and it intends to purchase a maximum of $3 billion in Bitcoin as a backup for UST.
Kwon, made the remarks during an appearance on Tuesday's Unchained show. Laura Shin, the show's host, asked Kwon about the short-term ramifications of owning so much Bitcoin for the sustainability of UST.
"The very worst situation will be if we were purchasing Bitcoins and a collapse eventuated six months later, and it's associated with significantly decline in sales for UST," Kwon added humbly. This possibility, though, does not keeping him awake at night: "I'm sort of banking that the long-term forecast of Bitcoins moving up and stocks being capable of sustaining UST consumption reductions is the more likely scenario."
Kwon has already been purchasing Bitcoins in order to maintain it in Terra's treasury as 40% of the backing for UST. Terra has already acquired 30,727.9 BTC, with the most recent acquisition being 2,943 BTC on Tuesday. Terra is now the third-largest Bitcoin single-wallet collector.
Danku_r, a cryptocurrency YouTuber, contended to his 54,000 subscribers on Wednesday that adding Bitcoin to Terra's coffers will help alleviate the impact of a dramatic fall in UST consumption. He said that Terra's actions will assist the government "swallow the supply shrinkage of UST," averting a "death spiral owing to market turmoil."
One of Kwon's stated aims for the Luna Foundation Guard treasury is to become Terra "the largest single-wallet holder of BTC."
According to Bitcoin wallet monitor Bitcoins Treasuries, Kwon will have to gather more than 125,051 BTC to usurp the current top, Michael Saylor's MicroStrategy.
Later in the thread, Kwon confirmed Terra's status as a layer-2 solution for the Bitcoin blockchain, living true to their image as an initiator. He said that Bitcoin now has a gateway that enables it to be utilised "along a myriad of applications ranging from DAOs to NFTs to DeFi."
"And also in respect of expressive power, payment characteristics, and bandwidth, all of those things could happen on Terra."