Terra Captured $150M For The DeFi Ecosystem Fund

Terraform Labs is a South Korean company with the Terra public blockchain. The company has raised a whopping $150 million from several major investors in crypto. It includes Galaxy Digital, Arrington XRP Capital, Pantera Capital, and BlockTower Capital. Such a large sum of investment money is for Terra’s Ecosystem Fund. This is the fund that the Korean company uses to sponsor projects that are specifically built on the Terra blockchain. This Tendermint-based blockchain first establishes stablecoins that are based on its dollar-pegged TerraUSD (UST). After that, the company uses a unique algorithm for maintaining a stable value of UST as well as its derivatives. This incentivizes the traders to buy extra supplies of UST if by chance there is a reduction in value in return for LUNA, Terra’s native governance token. 

The amazing steadiness of the USTs has led to the rapid growth and success of Terra. Moreover, the investors have started to notice stablecoins. At the beginning of 2021, both Pantera Capital and Coinbase Ventures contributed their parts to a $25 million funding round. They did this for helping the company in building more UST-backed applications such as CHAI that is one of the most famous mobile payments dapp with more than 2.5 million users in South Korea.

What’s More?

The sudden growth of the DeFi industry has led to confusion for such a truly decentralized stablecoin capable of scaling. Several stablecoin projects such as Tether’s USDT (the first most successful and largest project) led to DeFi. However, the concept of centralization has sunk USDT in many years of legal difficulty. As per Do Kwon, Terra’s founder and CEO, different other decentralized stablecoins such as MakerDAO’s DAI are projects that need a large sum of investment money which is why they have struggled with scalability so much. Now, TerraUSD is the fifth-largest stablecoin having a $2 billion market cap. It aims at solving the big problems. Do Kwon wishes that UST becomes the inter-chain stablecoin of choice for people. 

The funds in the ecosystem will be used to develop all the projects in Terra’s DeFi ecosystem. Most of the projects in Terra’s DeFi ecosystem are built or being built on Terra are decentralized protocols and several other applications. They aim towards mainstream adoption using the company’s stablecoins. The company will soon allocate the funds in two years.

Do Kwon wrote in an email to the famous crypto news website CoinDesk, “We’re thrilled to have the continued support of many long-time, early investors in the Terra ecosystem. We’re delighted to offer the Ecosystem Fund as an opportunity for builders, entrepreneurs, and our community to supercharge the Terra economy and build something extraordinary.”