Terra's Bitcoin Gambit: Key To Decentralized Stablecoin Success?

February 2022 saw a $1B private token sale by LUNA’s nonprofit foundation, aimed at establishing a decentralized Bitcoin-denominated foreign reserve fund so that Terra stablecoins can be redeemable in Bitcoin and not only LUNA.By giving UST holders the right to redeem for $1 worth of Bitcoin rather than only by minting new LUNA, it is possible that Terra has found an end-run around the “zero terminal value” argument made by most algo stablecoins bears.Since Terra is a layer 1 blockchain with a wider array of stablecoin choices and decentralized applications, it can grow its liquidity with less volatility, more consistently, and without resorting to the 7,000%+ APYs that eventually brought ruin to prior algo stablecoin offerings like OHM.Merchant acceptance is happening in several ways on Terra to soak up the UST, whose market cap has ballooned from $3B to $15B since November.