Terraform Labs, the South Korean company behind the Terra public blockchain, has raised $150m from major crypto investors including Arrington XRP Capital, Pantera Capital, Galaxy Digital and BlockTower Capital.
The $150m commitment is to Terra’s Ecosystem Fund, which Terraform Labs uses to sponsor projects built on the Terra blockchain. Projects like Mirror protocol, Anchor protocol, Pylon protocol, among others, utilize the Terra blockchain.
Terra, which is a Tendermint-based blockchain, deploys a suite of stablecoins based on its dollar-pegged TerraUSD (UST). Terra uses an algorithm to maintain a steady value for UST and its derivatives, incentivizing traders to purchase excess supplies of UST if there’s a drop in value in exchange for Terra’s native governance token LUNA.
UST’s stability has led to a Terra boom, and investors are noticing the stablecoin, the firm said. “The onset of dozens of projects on Terra has induced the need to bolster the ecosystem’s capital & resource base to support its exponential growth effectively” the firm explained. “Culminating in the Ecosystem Fund to guide the development of Terra towards a brighter future.”
It stated the Ecosystem Fund would propel the company towards its next adoption phase. Specifically, “augmenting an accessible, cross-chain DeFi supersystem targeting mainstream adoption.”
Most of the projects currently being built on Terra are decentralized protocols and other applications aiming for mainstream adoption using Terra’s stablecoins. Terraform Labs will allocate the funds over the course of two years.
The company also revealed, “The Ecosystem Fund serves as a capital foundation for builders to access the resources of the industry’s leading investors to manifest their vision for apps, protocols, & tooling on Terra. Accepted applicants will unlock a line of communication with the ensemble of investors.”
Earlier this year, Pantera Capital and Coinbase Ventures contributed to a $25m funding round to help Terraform Labs build more UST-backed applications, like CHAI, a popular mobile payments dapp with over 2.5 million users in South Korea.
According to Terra’s founder and CEO, Do Kwon, other decentralized stablecoins like MakerDAO’s DAI are capital intensive and have thus struggled with scalability. TerraUSD, now the fifth-largest stablecoin with a $2bn market cap, aims to solve the problem. Kwon hopes UST will become the inter-chain stablecoin of choice.
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