Following the Luna Foundation Guard’s (LFG) purchase of 5,040 bitcoin on Wednesday, the following day the Singapore-based non-profit announced it will be acquiring $100 million avalanche (AVAX) tokens. LFG explained on Thursday that this purchase was made to align Terra networks with Avalanche ecosystems.
LFG Adds $100 Million to UST Reserve in Avalanche Backed LFG
On Thursday, the Luna Foundation Guard announced that it inked a deal with the Avalanche Foundation to acquire $100 million worth of AVAX, the Avalanche blockchain’s native asset. LFG is a non-profit dedicated to fostering decentralized finance (defi) via the Terra (LUNA) network and the blockchain’s algorithmic stablecoin UST. LFG detailed that the goal behind purchasing AVAX was meant “to help bolster its UST Decentralized Forex Reserve and strategically align the two ecosystems.”
LFG as well as the Avalanche Foundation are handling the transaction over-the counter (OTC). AVAX, which has received bitcoin (BTC), backing will be the second asset that is not correlated in the UST Reserve. According to a press release, Bitcoin.com News has learned that LFG will be paying for AVAX with the stablecoin USS. This announcement follows on from the Anchor Protocol announcing AVAX support. Anchor executive Ryan Park announced on March 17 that Anchor now supports Avalanche via Xanchor (Cross Anchor), which is an “extension to Anchor Protocol.”
“The premise of the UST Reserve is to provide a backstop against UST peg deviations in instances of sharp contractions of UST demand exogenous to Terra’s algorithmic model,” Nick Platias, a Governing Council Member of LFG explained on Thursday. Platias discussed further the advantages of diversification in protecting the UST Reserve. Platias added:
By diversifying the base of non-correlated assets to major assets like BTC and AVAX, the UST Reserve offers a more robust asset pool to defend against volatility and alleviate pressure on the Terra protocol’s open market arbitrage incentives.
Avalanche customers will also be able trade UST for AVAX through the Avalanche blockchain. “We are thrilled that our partners at LFG will be adding AVAX to their fast-growing UST reserve,” Emin Gün Sirer,The Avalanche Foundation director said this in a Thursday press release. “Decentralized stablecoins like UST are proving vital to crypto ecosystems, and AVAX provides a great reserve asset next to BTC. We also look forward to collaborating on projects that will continue to grow both the Terra and Avalanche ecosystems,” Gün Sirer added.
Currently, since LFG’s last bitcoin (BTC) purchase of 5,040 BTC on Wednesday, the non-profit’s wallet has not seen any additional bitcoin deposits. While Anchor Protocol’s Xanchor platform supports Avalanche, the defi protocol’s documentation hints at “bringing all of Anchor’s functionality to other non-Terra blockchains.” LFG has not disclosed if the diversified UST Reserve will leverage other native crypto assets besides bitcoin (BTC) and avalanche (AVAX) going forward.
How do you feel about LFG contributing $100 million to the UST Reserve in AVAX? Comment below and let us know how you feel about the subject.
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