The Avalanche Foundation announced via Twitter on Friday that Terraform Labs and the Luna Foundation Guard (LFG) have purchased 3.06m AVAX in total.
The announcement came following an inquiry from members of the Avalanche Community about the details around the AVAX reserves held by Terraform Labs and the LFG.
The Terraform Labs’ AVAX purchase comes with a one-year lockup and the amount represents around 0.5% of last week’s AVAX volume.
While the LFG plans to use the AVAX for the Terra reserve pool and the purchased allocation represents around 0.9% of last week’s AVAX volume.
The Twitter announcement also added that the LFG has not shared any plans on using the AVAX as it is working on a Terra chain fork.
“Given the proposed Terra chain fork, LFG has disclosed no plans to use the AVAX.”
The Avalanche Foundation also added that should any sales be contemplated for the LFG reserves; it is ready to work with LFG “on a sensible trading strategy.”
According to Bloomberg, LFG, which supports public blockchain Terra, chose Avalanche Foundation in April to diversify and expand its stablecoin reserve by acquiring $100 million worth of AVAX from the Avalanche Foundation.
In the latest figure, the total reserve balance of the LFG remains over $232.7 million, and over 66% of the reserves are TerraUSD (UST), whereas AVAX takes nearly a quarter of its reserve, which takes around $58.83 million, trading at around $29.81.
Avalanche and Terra both are layer one blockchains, similar to Ethereum, where users can write codes and build different projects from non-fungible tokens to decentralized finance applications.
The Avalanche received $230 million in funding last September, pushing the price of AVAX to a record high of $68.89. However, subject to negative impacts from LUNA crashes, its price has dropped significantly.
Currently, AVAX was trading at $29.9 during the intraday, slightly up 1.53% on Friday in the Asia trading section.
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The Luna Foundation Guard (“LFG”), primarily focused on the Terra blockchain, expands its TerraUSD (“UST”) stablecoin reserve by purchasing $100 million worth of Avalanche tokens.
The native token of the Avalanche blockchain becomes the second-largest asset in the UST reserve after the Bitcoin token.
Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems, which includes TerraUSD (“UST”) – the flagship stablecoin of the Terra network and the leading decentralized stablecoin in DeFi by market cap
Terra’s UST stablecoin, backed by bitcoin tokens, could eventually reach $10 billion, the company said. To strengthen the ability of Terra’s UST stablecoin to be pegged to U.S. dollar fiat, the company added $230 million in bitcoin on Wednesday, following an injection of more than $1 billion in bitcoin in January.
Emin Gün Sirer, CEO of The Ava Labs said that:
“Terra’s ability to scale their stablecoins is one of the reasons that drew Avalanche to its platform.”
Do Kwon, the founder of Terraform Labs, the blockchain startup in charge of the Terra blockchain and LUNA coin, said Bitcoin will remain the “primary backer” for the UST stablecoin, but the deal with Avalanche “buys Avalanche’s UST and Terra a lot of user familiarity.”
As reported by blockchain.News on December 9, 2021, one of Asia’s biggest Venture Capital firms, Chiron Partners, has launched a $50 million ecosystem fund christened the Chiron Terra Fund I (CTI), aimed at supporting innovative projects that are emerging from the Terra blockchain ecosystem.
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