The Luna Foundation Guard (LFG) on Tuesday bought 2,508 Bitcoin, worth about $100 million, as part of a plan to amass $10 billion worth.
The LFG is a nonprofit organization responsible for building the reserves that back Terra's dollar-pegged stablecoin, TerraUSD (UST). Nearly $17 billion worth of the cryptocurrency has been issued so far, making it the 14th largest digital asset by market cap.
The entity’s former reserve model backed the stablecoin algorithmically using the protocol’s native cryptocurrency, Terra (LUNA), currently the ninth-largest at present. (A dollar of LUNA was redeemable at any time for one TerraUSD, and vice versa.)
However, as Terra co-founder Do Kwon noted last month, LUNA faces price stability issues that hurt its function as a reserve asset.
As such, the organization is now opting to back its stablecoin primarily with Bitcoin. In an interview last month with Bitcoin evangelist Anthony Pompliano, Kwon called the primary cryptocurrency “the soundest and most credibly neutral asset in the digital asset space.”
Though Bitcoin still faces daily volatility, its price movements generally are less erratic than the altcoins beneath it (excluding stablecoins). In the long term, some investors expect the asset to function like “digital gold” thanks to its reliable supply cap of 21 million.
Today, the LFG holds about $2.3 billion in its reserves, with about three-quarters of that Bitcoin. The remainder is split across USDC, USDT, and a tiny amount of LUNA.
With its rate of accumulation, LFG is well on its way to surpassing MicroStrategy’s Bitcoin holdings. The business intelligence company, which has 129,000 Bitcoin on its balance sheet, last week bought Bitcoin for the first time in two months using a Bitcoin-collateralized loan.
By contrast, the LFG only just finished purchasing $112M in Bitcoin on April 10, according to on-chain data. As recently as March 26, Terra’s Bitcoin address held less than $1 billion.