$10M Fund From Cosmos-Based Terra Will Gladly Back DeFi Projects on Ethereum

The developers of the Tendermint-based Terra-Suite from Stablecoins are opening a fund to promote the use of its tokens wherever people operate decentralized finance (DeFi) – and that primarily means Ethereum.

Terraform Labs announced Thursday that Terraform Capital has launched a $ 10 million fund to advance the integration of TerraUSD (UST) or LUNA (Governance Token) across DeFi by covering security clearance costs. This follows immediately after a $ 25 million round of funding from many of Crypto’s largest VCs last month.

“The fund’s main objective: to improve the integration of UST into Ethereum’s DeFi stack,” Do Kwon, co-founder of Terraform Labs, told CoinDesk in an email. “Expected ROI: high – can fund a hundred audits with some successful integrations.”

The fund is establishing a list of security auditors ready to move forward quickly and receive new offers with the security guarantees desired by first-time adopters. Right now they have a few companies on deck doing the job: Sentnl, Quantstamp, and Solidified.

“In 2020 alone, over $ 240 million worth of digital assets were lost or stolen from DeFi hacks, but no funds were compromised in the code reviewed by Quantstamp,” said Richard Ma, CEO of Quantstamp, in a press release.

As mentioned earlier, Terraform wants to encourage the use of UST and LUNA, but is not concerned about which blockchain the project is based on. Although it is a Tendermint blockchain, this fund is happy to invest wherever Terraform’s cryptocurrencies can be ported.

“We want this fund to accelerate the amount of buildings that can be built on Ethereum (and at all other levels of builders),” Jeffrey Kuan of Terraform’s business development team told CoinDesk in an email.

He said security reviews are the main cost barrier for these new teams. “We hope the fund can reduce friction as much as possible for promising teams that are building, with the goal of increasing the GDP of the blockchain ecosystem,” said Kuan.

Whatever maximalists may be, take note: this type of fund is all about the basics of a token battle rather than promoting one of the crypto tribal battles.

One of Terraform Labs’ original backers, Michael Arrington, founder of Arrington XRP Capital, told CoinDesk on a phone call that for LUNA holders it doesn’t matter where UST is used as the two tokens are inextricably linked.

“If there’s a product that uses UST, it drives LUNA demand,” said Arrington. “Whether it’s on Ethereum or Cosmos doesn’t matter.”