$139M Terra proposal to ‘bring awesome UST use-cases’ to DeFi projects

Decentralized stablecoin issuer Terra has released an ambitious proposal to expand the interchain deployment of the UST stablecoin across five projects on Ethereum, Polygon, and Solana.

Terra research post on January 6 UST Goes Interchain: Degen Strats Part Three It provides details on how the $139 million in terrestrial treasuries and LUNA’s native stablecoin will be used and on platforms if the proposal passes.

Terra is a blockchain that provides stablecoin algorithms and LUNA has a market capitalization ($28.5 billion).

In each proposed deployment, Terra will deposit ground reservoirs in amounts varying from $250,000 to $50 million to enhance the stability of each of the new partner projects. The main goal is to “bring great terrestrial reservoir use cases to Ethereum DeFi.” The judging panel will vote to approve the proposal at a later date.

Terra Do Kwon founder explained this on December 21 tweet He wishes that treasuries would be the dominant stablecoin in the cryptocurrency market. Distribution is intended to help Terra accelerate its efforts to increase its market value. At the moment, only stablecoins BUSD ($14 billion), USDC ($43 billion) and USDT ($78 billion) have a market cap above UST ($10.3 billion).

DeFi liquidity provider and market maker Tokemak on Ethereum will receive a deposit of $50 million in terrestrial treasuries for at least six months if the proposal is passed.

Rari Fuse, a lending and borrowing without permission platform, will receive $20 million for a period of six months. The money will be deposited into three pools on Fuse to help the terrestrial vaults become the “cheapest settlement to borrow” in Fuse.

Revenue pool Convex Finance to acquire Ethereum will receive $18 million for 6 months. Terra will inject larger LUNA incentives to liquidity providers into several pools across the platform that use under-floor tanks. Convex is one of the largest DeFi revenue pools with a market capitalization of $1.9 billion.

The OlympusDAO (OHM) Decentralized Reserve Currency Protocol has already partnered with Terra and will launch gOHM, a laminated version of OHM, on Terra. Olympus’ proposal includes a commitment of $1.425 million to its $694 million Treasury through $1 million in Treasury floor bonds to stay in Treasury “forever” and $425,000 in 3-month LUNA incentives.

InvictusDAO (IN) is an offshoot of OlympusDAO on the Solana Network. Terra will increase its Solana expansion by contributing $250,000 in ground tanks to create an IN/UST bond. Frax Finance (FRAX) will match Terra’s bond contribution to $250,000 in FRAX according to the Jan. 6 AMA.

USDC and USDT, the two largest stablecoins by market capitalization, are currently the main holdings of the project in its $71 million treasury. The IN team seemed upbeat about the partnership with Terra and said in the AMA:

The floor cabinet contract helps solve structural treasury issues because we don’t want to increase our holdings of USDC and USDT because it comes with central risk. The floor cabinets help grow the treasury and the amount of bonds we can sell.”

A representative from InvictusDAO told Cointelegraph that the proposed partnership would help the Solana ecosystem: “With the chain being dominated by centralized stablecoins USDC/USDT, I believe the introduction of quality cross-chain stables will benefit the ecosystem tremendously.”

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At the time of writing, the proposal appeared to have strong support from Terra’s management participants.