Fireblocks Sees $500M injection Into Terra DeFi

Fireblocks, a specialist in cryptocurrency custody, witnessed a surge of institutional customers flocking to decentralized finance (DeFi) once they were granted access to Terra. Terra, the blockchain ecosystem and issuer of UST, ranks as the largest stablecoin after tether and USDC. Michael Shaulov, the CEO of Fireblocks, revealed that the demand from early access program participants, including crypto hedge funds, venture capital firms, and high net worth individuals, has been extraordinary.

According to Shaulov, since the introduction of DeFi access on Terra, an overwhelming demand has emerged. Within the first 72 hours, a staggering $250 million was deployed, and as of now, just one week later, over half a billion dollars of transactions have made their way into Terra via our platform.

It is important to note that Fireblocks' current Terra DeFi access for clients is fully permissionless and separate from the custody firm's recently announced know-your-customer (KYC) whitelisted DeFi pooling system, in collaboration with Aave Arc. Shaulov indicated that expanding into this territory could be considered in the future.

Terraform Labs, the South Korea-based founder of Terra, established the project in 2018 on the Cosmos "internet of blockchains" platform. Originally focusing on cross-border payments with the LUNA token, Terra has rapidly expanded to cover stablecoins, DeFi, non-fungible tokens (NFTs), and gaming. Fireblocks initiated its partnership with Terra in December 2020.

Terra boasts an impressive 4 million unique wallets and has experienced 400% user growth in the past two years, with over $30 billion in total locked value, according to DeFiLama.

To fortify the algorithmic UST stablecoin, which remains anchored to $1 through a smart contract that burns LUNA tokens to mint new UST tokens, Terra pursued the purchase of $1.6 billion in bitcoin reserves and committed to acquiring an additional $10 billion.

However, the assimilation of bitcoin reserves into the UST stablecoin apparatus has raised concerns among some financial experts. Shaulov clarified that Fireblocks' custody platform is not involved in Terra's bitcoin treasury management, which falls under the oversight of the Luna Foundation Guard. Nevertheless, Shaulov assumes a philosophical standpoint when addressing risk and innovation.

Fireblocks' mission revolves around providing secure access to well-informed investors who conduct thorough due diligence. They acknowledge and embrace the demand while keeping a keen eye on the trajectory of innovation. Shaulov believes there is unquestionably a place for this kind of stablecoin innovation, particularly with regards to what Terra is spearheading.