TL;DR Breakdown
- Terra’s Luna Foundation Guard (LFG) completes the buying of AVAX worth $100 million through UST stable coins.
- Terraform Labs acquires another $100 million in LUNA for AVAX.
- The LFG extends and diversifies its crypto reserves
Blockchain protocols and organizations tend to make different collaborations and partnerships to expand their reach. This increases their demand in the market and enables them to explore new opportunities within the crypto space. A similar idea was put forth by the Terra blockchain, as it continues to invest in its crypto reserves heavily.
Terra also has its own stablecoin, UST. This crypto reserve supports the growth of UST and makes it more reliable. The LFG had pledged a $10 billion Bitcoin reserve, and since then, the organization has acquired BTC at a fast pace. In a recent development, LFG has shown interest in acquiring AVAX tokens to support the UST backing reserve.
LFG and TFL collectively buy AVAX for $200 million
The terra blockchain is supported by the Luna Foundation Guard (LFG) and the Terraform Labs (TFL). These organizations have moved to get their hands on AVAX tokens. AVAX is the native crypto coin of the Avalanche Foundation. Since last year, the coin has experienced significant growth in valuation and market demand. It is amongst the most in-demand tokens in the crypto market. The current market cap of AVAX is around $23.30 billion.
On April 7, LFG made an over-the-counter (OTC) purchase for AVAX tokens. After BTC, it is the first crypto token that has been pursued by the Terra Blockchain. LFG bought $100 million worth of AVAX through its UST stablecoin. The trade was confirmed by a representative of Ava Labs.
In addition to this, TFL also swapped $100 million worth of LUNA to AVAX. The announcement of this trade deal was done through the official Twitter account of UST. As per the announcement, this swapping of crypto tokens was done to “strategically align ecosystem incentives.”
Through these deals, the Avalanche Foundation has gained $100 million worth of UST stablecoin and $100 million worth of LUNA. Thus, the deals mark the beginning of a strategic partnership between the Terra Blockchain and the Avalanche Foundation.
Terra’s LFG continues to build its crypto reserve.
Since the start of this year, LFG has remained super active while buying crypto assets. The platform has bought $1.6 billion in BTC for its reserve. It has plans to extend this Bitcoin reserve to $10 billion. The CEO and Founder of Terra, Do Kwon, is a big supporter of this Bitcoin treasury. Earlier this week, Terra acquired $230 million in BTC as well.
The Terra blockchain aims at fostering the growth of UST through this reserve. As the token is pegged to the US Dollar, this reserve will improve its reliability. The UST stablecoin is not backed by fiat, but it utilizes LUNA tokens to be pegged by the US Dollar.
The partnership makes AVAX the second layer one coin to be added to the LFG treasury. Both companies are highly optimistic about the deal, as they believe it is a start of a healthy collaboration that will help both communities to grow together. In addition to this, Terra will also be collaborating with Avalanche on a new gaming subnet. This indicates that the partnership will lead to the inclusion of more Terra applications into the Avalanche ecosystem.
Avalanche itself is moving to attract more lucrative deals and partnerships. The organization is marketing to attract different collaborations from top projects and crypto firms. However, the deal with LFG will encourage Avalanche users to utilize UST. Thus, it is imperative that Avalanche is pursuing the growth of its platform by ensuring more feasibility and accessibility to consumers.
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