The $ 139 million Terra proposal has great UST use cases for DeFi projects

The decentralized stablecoin issuer Terra has made an ambitious proposal to scale the implementation of the stablecoin UST chain to 5 projects on Ethereum, Polygon and Solana.

research Terra’s June 1 release describes how the $ 139 million UST and native LUNA token will be used and on which platforms if the proposal is accepted.

Terra is the blockchain that powers the algorithmic stablecoin, and the native token LUNA currently has a market capitalization of $ 25.3 billion.

LUNA 4-Hour Price Chart | Source: Tradingview

With each implementation proposal, Terra UST will transfer various amounts from $ 250,000 to $ 50 million to improve the stability of each new partner project. The main goal is to “bring great UST use cases to DeFi Ethereum”. The governance participants will vote on the proposal at a later date.

Terra’s founder, Do Kwon, made it clear in tweets 21 that he expects UST to become the dominant stablecoin in the crypto market. The distribution proposal is intended to help Terra accelerate efforts to increase market capitalization. Currently, only the stablecoins BUSD ($ 14 billion), USDC ($ 43 billion) and USDT ($ 78 billion) have a higher market capitalization than UST ($ 10.3 billion).

The DeFi liquidity provider and market maker Tokemak on Ethereum will receive a deposit of $ 50 million in UST for at least 6 months if the proposal is accepted.

The approval-free loan and credit platform Rari Fuse will receive UST 20 million in 6 months. Funds are deposited into three pools on Fuse to make UST the “cheapest stable loan”.

Earnings aggregator Convex Finance on Ethereum will receive $ 18 million in 6 months. Terra will offer larger LUNA incentives to liquidity providers in some pools on the platform that use UST. Convex is one of the largest DeFi earnings aggregators with a market cap of $ 1.9 billion.

The decentralized reserve currency protocol OlympusDAO (OHM) is currently working with Terra and will publish gOHM (a wrap version of OHM) on Terra. Proposals for Olympus include $ 1,425 million in coffers ranging from $ 694 million to $ 1 million in UST bonds held “forever” in the Treasury and $ 425,000 in LUNA favors for three Months.

InvictusDAO (IN) is a fork of OlympusDAO in the Solana network. Terra will accelerate its expansion into Solana by contributing $ 250,000 to create IN / UST bonds. Frax Finance (FRAX) is also contributing under $ 250,000 in FRAX AMA 6/1.

USDC and USDT, the two largest stablecoins by market cap, are currently the project’s major holdings in the $ 71 million treasury. Team IN is optimistic about the partnership with Terra and said in the AMA:

“Owning UST helps with treasury issues as we do not want to increase our USDC and USDT holdings as this carries a concentration risk. The UST helps to increase the treasury and the number of bonds that we can sell. “

A representative from InvictusDAO says the proposed partnership will help the Solana ecosystem:

“With USDC / USDT centralized stablecoins dominating the chain, I believe that the introduction of cross-chain quality stablecoins will be of great benefit to the ecosystem.”

At the time of writing, this proposal has strong support from the governance participants on Terra.

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