Terra receives $ 150 million for the DeFi Ecosystem Fund

Terraform Labs, the South Korean company behind the public Terra blockchain, has raised $ 150 million from a handful of large crypto investors including Arrington XRP Capital, Pantera Capital, Galaxy Digital and BlockTower Capital.

The $ 150 million pledge goes to Terra’s Ecosystem Fund, through which Terraform Labs sponsors projects based on the Terra blockchain.

Terra, a blockchain based on Tendermint, employs a range of stablecoins based on their dollar-linked TerraUSD (UST). Terra uses an algorithm to maintain a constant value for UST and its derivatives, encouraging traders to buy excess UST supplies when the value drops in exchange for Terra’s native governance token, LUNA.

The stability of the UST has resulted in a terra boom, and investors are starting to notice the stablecoin. Earlier this year, Pantera Capital and Coinbase Ventures contributed to a $ 25 million financing round to help Terraform Labs build other UST-enabled applications such as CHAI, a popular mobile payment application with over 2.5 million users in South Korea.

DeFi’s explosion has sparked a scramble for a truly decentralized stablecoin that can be scaled up. Stablecoin projects like Tether’s USDT, the first successful stablecoin and still by far the largest, resulted in decentralized funding (DeFi), but centralization has put USDT in legal trouble for years. And according to Terra’s founder and CEO Do Kwon, other decentralized stablecoins like MakerDAO’s DAI are capital-intensive and therefore struggle with scalability.

TerraUSD, now the fifth largest stablecoin with a market capitalization of $ 2 billion, wants to solve the problem. Kwon hopes UST will become the inter-chain stablecoin of choice.

The Ecosystem Fund will be used to develop projects in Terra’s DeFi ecosystem. Most of the projects currently being built on Terra are decentralized protocols and other applications aiming for general adoption with Terra’s stablecoins. Terraform Labs will distribute the funds over a period of two years.

“We are very excited about the continued support of many long-standing, early investors in the Terra ecosystem,” Kwon wrote in an email to CoinDesk. “We are pleased to offer the Ecosystem Fund as an opportunity for builders, entrepreneurs and our community to strengthen the Terra economy and build something extraordinary.”

Comments are closed.