Terra's $139 million offer for DeFi projects

Terra's $139 million offer for DeFi projects

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Notice: This article is for informational and educational purposes only, and you should not take it as financial advice.

Terra would provide over $ 139 million to UST and LUNA for several leading DeFi projects at Ethereum, Solana and Polygon for at least the next six months.

Decentralized issuer of stable coins Terra has issued an ambitious proposal to expand the interchain implementation of its UST stabilcoin to five projects at Ethereum, Polygon and Solana.

A January 6 Terra research post provides details on how the $ 139 million UST and its original stabilcoin LUNA would be used and on which platforms the proposal would be adopted.

Terra is a blockchain that delivers algorithmically stable coins, and LUNA has a market capitalization ($ 28.5 billion).

For each proposed implementation, Terra would deposit UST in various amounts of $ 250,000 to $ 50 million to increase the stability of each of the new partnership projects. The major goal is to “bring great UST use cases in Ethereum DeFi”. Voting for management participants to approve the proposal will be held at a later date.

Founder Terre Do Kwon made it clear in a tweet on December 21 that he wants UST to be the dominant stabilcoin in the crypto market. The distribution aims to help Terri accelerate its efforts to increase its market capitalization. Currently, only the stable coins BUSD ($ 14 billion), USDC ($ 43 billion) and USDT ($ 78 billion) have a higher market capitalization than UST ($ 10.3 billion).

DeFi liquidity provider and market maker Tokemak on Ethereum will receive a $ 50 million deposit in UST for at least six months if the proposal passes.

Rari Fuse’s helpless lending and borrowing platform would receive $ 20 million in six months. The funds would be deposited in three pools on Fuse to help UST become the “cheapest stable to borrow” on Fuse.

Yield aggregator Convex Finance on Ethereum would receive $ 18 million in 6 months. Terra would inject higher LUNA incentives for liquidity providers in several pools across the platform using UST. Convex is one of the largest DeFi yield aggregators with a market capitalization of $ 1.9 billion.

The OlympusDAO (OHM) decentralized reserve currency protocol is already in partnership with Terra, and will publish gOHM, the wrapped version of OHM, on Terra. The proposal for Olympus includes a $ 1.425 million commitment for its $ 694 million treasury through $ 1 million in UST bonds that will remain in the treasury “forever” and $ 425,000 in LUNA incentives for 3 months.

“InvictusDAO (IN) is a fork of OlympusDAO on the Solana network.” Terra would increase its expansion on Solana by contributing $ 250,000 to UST to create IN / UST bonds. Frax Finance (FRAX) will match Terra’s contribution to the $ 250,000 bond in FRAX under the AMA from January 6th.

USDC and USDT, the two largest stable coins by market capitalization, are currently the project’s main funds in a $ 71 million vault. The IN team was optimistic about the partnership with Terra and told the AMA: “Holding UST is helping to address the structural problems of the treasury because we do not want to increase our USDC and USDT holdings because it comes with centralized risk. UST helps increase the treasury and the amount of bonds we can sell. ”