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Terra Adds 5000 Bitcoin, Worth Over $230 million to its Reserves

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Terraform Labs, which controls the stablecoin terraUSD, just bought 5000 bitcoins, worth over $230 million to keep terraUSD stable. Their founder and chief executive took to Twitter to announce the company’s latest purchase in a very interesting manner.

According to a report from CoinMarket Cap, TerraUSD is the fourth largest stablecoin in the market. They are only behind USDC, Binance USD, and tether. These stablecoins are pegged to stable assets, like the US dollar, but still, have the benefits of currencies like Bitcoin or Ethereum. This makes TerraUSD, Binance USD a much more sensical investment option as compared to the frequently changing market values of other volatile cryptocurrencies in the market, like Ethereum or Bitcoin.

TerraUSD uses a very sophisticated model to keep it stable. It is based on an algorithm that keeps its value at $1. This algorithm can destroy or burn luna tokens and convert them into terraUSD tokens. This makes luna more scarce and keeps terraUSD less scarce, thereby keeping its value constant. At any time, any luna holder is welcome to convert their $1 worth of luna tokens into $1 worth of terra tokens, which helps in the process.

This algorithm was seen in action last week when terra was losing ground. Terraform’s luna was at an all-time high worth of almost $119 last week. But, its value has since decreased, and it has touched a value of $99.85, thereby pushing it to the 2470th position in terms of bitcoin values.

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