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The Luna Foundation (LFG) bought 5.040 bitcoin last Wednesday. The next day, the non-profit in Singapore said it would buy $100million worth of Avalanche tokens (AVAX). On a Thursday to be precise, the LFG stated the purchase was made to help the Terra and Avalanche ecosystems work together in a strategic and coordinated manner.
LFG To Boost UST Reserve With $100 Million In The Avalanche Funding
The LFG announced on Thursday that it has signed an agreement with the Avalanche Foundations to purchase about $100million value of AVAX, which is the native asset or value of the Avalanche Blockchain. The purchase was made to promote decentralized finances (DEFIs) using the Terra or LUNA network with the algorithm of the Blockchain stablecoin UST.
The LFG was formed as a non-profit organization to specifically purchase AVAX token which they stated was intended to “assist in the strengthening of its UST Decentralised Forex Reserves and to link these two ecosystem strategically”.
Both the Avalanche Foundations and LFG will be conducting the transaction, which will be in a direct trading manner, according to them. In addition to the recent support of bitcoin (BTC), AVAX will be ranking second in non-correlated assets to be included in the UST reserve. The LFG are instructed to pay for the AVAX with the use of stablecoin UST, according to the recent press release given to Bitcoin.com News on the subject.
The announcement comes as a result of the Anchor Protocols gaining support for AVAX. Avalanche is now supported by Anchor through Xanchor/Cross Anchors, which is said to be an “extension of Anchor Protocol”, according to the Anchor executive Ryan Park, who announced the addition on the 17th of march.
In an interview with LFG on Thursday, Nick Platias, an LFG Governing Council Member, said that UST Reserves was established to function as a “control” against the UST pegs deviation in the event of severe contractions in UST demand that were not caused by Terra’s algorithmic model. Platias went on to address the advantage of diversifications when it has to do with preserving the United States Treasury Reserve. Platias further stated the following:
“With the addition of large assets such as BTCs and AVAX to the UST Reserve’s foundation of non-correlated assets, the reserve provides a more resilient asset pool to protect against volatility and relieve strains on the Terra’s protocol open markets arbitrage incentive”.
Users Of Avalanche Blockchain Will Be Able To Exchange UST For AVAX.
An announcement which was earlier made denotes that Avalanche users can trade UST for AVAXs, and these trades can be done on the Avalanche Blockchains. The director of the Avalanche Foundation, Emin Gün Sirer expressed this in his speech on Thursday saying, “They are excited about their partnership with LFG who will add AVAX to their rapidly growing UST reserves”. In addition to Bitcoin, they claim that decentralized stablecoins such as the UST and AVAX have been shown to be crucial in crypto ecosystems. The Terra and Avalanche ecosystems will benefit from the collaboration, Gün Sirer said.
Since LFG’s most recent Bitcoin (BTC) purchases of 5,040 BTCs on Wednesday, the non-bitcoin profit’s wallets have not received any new bitcoin deposits, according to the records. In addition to supporting Avalanche Foundation, the DEFIs protocol’s whitepaper suggests that it will “export all of Anchor’s functionalities to the other non-Terra Blockchains in the future.” There has been no indication from LFG as to whether the diversified UST Reserves may utilize different native crypto-assets in addition to BTC and the avalanche (AVAXs) in the future.
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