Home Luna Terra Raises $150M DeFi Ecosystem Fund

Terra Raises $150M DeFi Ecosystem Fund

Terraform Labs, the South Korean startup behind the Terra public blockchain, has raised $150 million in funding from investors including Arrington XRP Capital, Pantera Capital, Galaxy Digital, and BlockTower Capital.

Terra Raises $150 Million for the DeFi Ecosystem Fund iBase Trading.
iBase Trading Crypto News

Terraform Labs, the South Korean startup behind the Terra public blockchain, has raised $150 million in funding from investors. These include Arrington XRP Capital, Pantera Capital, Galaxy Digital, and BlockTower Capital.

Terra’s Ecosystem Fund, which Terraform Labs uses to finance initiatives based on the Terra blockchain. Consequently, it received a $150 million commitment.

Advertisement

Terra, a Tendermint-based blockchain, offers a stablecoin suite based on its dollar-pegged TerraUSD token (UST). Terra uses an algorithm to keep the value of UST and its derivatives stable. Furthermore, it entices traders to buy surplus UST in exchange for Terra’s native governance token, LUNA if the value drops.

Investors are Taking Notice of Terra

The stability of UST has sparked a Terra boom. Pantera Capital and Coinbase Ventures contributed to a $25 million funding round earlier this year to assist Terraform Labs to build more UST-backed applications. These include CHAI, a successful mobile payments dapp in South Korea with over 2.5 million users.

The rise of decentralized finance (DeFi) has prompted a race to create a fully decentralized stablecoin that can scale. DeFi was sparked by stablecoin projects like Tether’s USDT, the original and still largest stablecoin. Although centralization has ensnared USDT in years of legal wrangling. Other decentralized stablecoins, such as MakerDAO’s DAI, are capital heavy, according to Terra’s founder and CEO, Do Kwon, and hence have struggled with scaling.

TerraUSD, the fifth-largest stablecoin with a market valuation of $2 billion, tries to address the issue. Kwon hopes that UST will become the preferred inter-chain stablecoin.

Terra, a Tendermint-based blockchain, offers a stablecoin suite based on the TerraUSD token, anchored to the US dollar (UST). Terra employs an algorithm to maintain the value of UST and its derivatives. It incentives traders to acquire excess UST in exchange for Terra’s native governance token, LUNA, if the value falls.

Investors are taking notice of UST’s stability, which has fueled a Terra boom. Terraform Labs received a $25 million funding round earlier this year from Pantera Capital and Coinbase Ventures to help it build more UST-backed applications, such as CHAI, a popular mobile payments app in South Korea with over 2.5 million users.

Stablecoins and Algorithmic Stablecoins

Stablecoins have proven popular in digital asset markets as alternatives to volatile cryptocurrencies like bitcoin (BTC, +1.71 percent) and ethereum (ETH, +0.15 percent), whether centrally managed types like tether and USD coin or decentralized versions like dai that are controlled by blockchain-based protocols.

Algorithmic stablecoins, such as Fei Protocol (FEI), are a new subcategory that uses software-coded methods included in the protocol to keep the currency peg. While some of these projects have had mixed results in terms of keeping the peg at a 1-to-1 reading, proponents claim they offer advantages.

The benefit of algorithmic stablecoins is that no one can take them away from their owners. They preserve all of bitcoin’s censorship-resistant qualities.

“The views and opinions on this Crypto News Website are solely those of the authors and contributors. These views and opinions do not necessarily represent those of iBaseTrading or its partners.”

Advertisement
Previous articleLitecoin Price Still Volatile with Hopes for LTC
Next articleShould You Buy Litecoin?
Abby Hernandez is an independent crypto writer for iBaseTrading. She is passionate about NFT, decentralization and anything related to blockchain technology. She has worked in the financial sector for 7 years and loves yoga and dancing.