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Terra Has An Ambitious Multi-Network Plan To Increase The UST Market Cap

Terra, the decentralized issuer of the UST stablecoin, seeks to expand its interchain deployment of TerraUSD. A total of five projects- spanning Ethereum, Solana, and Polygon – will turn this ambitious goal into a reality.

Terra Wants To Expand Aggressively

It is interesting to see the approach by Terra to bring TerraUSD to the masses. While UST has noted strong momentum in the past few months, things can always be better. A recent post by Terra Research indicates there are opportunities to explore. As much as $139 million of UST and LUNA can be utilized across these three blockchain ecosystems.

The proposal involves depositing varying amounts of UST into partner projects. Injecting this liquidity will enhance the stability of the projects. Moreover, it paves the way for new UST-oriented DeFi use cases on Ethereum, Polygon, and Solana. However, the plan will not go into action unless approved by community members through a voting process later this year. 

Terra Founder Do Kwon is convinced TerraUSD can become the dominant stablecoin in the cryptocurrency industry. Enhancing and streamlining the UST distribution can play a crucial role in that process. While TerraUSD is the fourth-largest stablecoin by market cap today, it is still far behind Binance USD, USD Coin, and Tether’s USDT. Bridging that gap will require tremendous effort.

Proposed UST Distribution Seems Appealing

The Terra Research post indicates how the $139 million in liquidity may be distributed:

  • Tokemak, an Ethereum-based liquidity provider and market maker, can receive $50 million in UST for six months.
  • Rari Fuse would see $20 million in UST deposited across three pools for its lending and borrowing solution.
  • Corvex Finance (Ethereum yield aggregator) may see an $18 million injection for six months. Additionally, better LUNA incentives may be offered to liquidity providers in several pools using UST. 
  • OlympusDAO, a current Terra partner, would note a $1,425 million commitment to its Treasury through $1 million in permanent UST bonds and the remainder in three-month LUNA incentives.  
  • InvictusDAO (Solana) can receive $250,000 in UST to develop IN/UST bonds. Frax Finance would match the amount contributed by Terra through an equal amount in FRAX tokens.

All of these initiatives can help TerraUSD close the gap to USDT and USDC. InvictusDAO, holding vast amounts of both stablecoins, sees merit in diversifying through UST. Structural treasury problems and the centralized risk associated with increasing USDT and USDC holdings has been a talking point for a while. UST can help its Treasury grow without that centralized risk. 

JP Buntinx
JP Buntinx has been writing about cryptocurrency since 2012. His interest in crypto, blockchain, fintech, and finance allows him to cover a broad range of different topics.