Terra’s Do Kwon said on Thursday that it had added to its reserves by purchasing Avalanche (AVAX) tokens worth $100 million in a ‘treasury Swap’ between LUNA and AVAX. AVAX is the first significant cryptocurrency other than bitcoin to find its way into the stablecoin’s reserve as a result of this OTC contract to add the stated AVAX tokens to UST reserves.
Terra, whose purchases are backed by The Luna Foundation Guard (LFG), went on to say that the AVAX swap was the start of a diversified and non-correlated asset pool supporting the $UST peg, implying that additional cryptocurrencies could be added in the future. The AVAX purchase will help both ecosystems thrive by integrating the LUNAtics and Terra builders with the lively Avalanche environment, ushering in an immersive cross-chain experience.
The AVAX venture follows Terra’s continuous acquisition of Bitcoin, which it intends to use to support TerraUSD (“UST”), the Terra network’s flagship stablecoin and the leading decentralized stablecoin in DeFi by market cap.
Do Kwon believes that cross-chain networks will be the future of blockchain networks, claiming that the alliance between Avalanche and Terra is the largest ever forged in web3.
Terra currently intends to use the AVAX obtained by LFG to create a substantial reserve against $UST by employing an automated minting technique similar to that used for $BTC. This means that UST will become pegged to AVAX, enabling it to be minted and redeemed against the layer 1 coin.
Do Kwon also announced that they would begin covering initial bootstrapping costs for certain AVAX ecosystem initiatives that employ UST, including audit costs. Furthermore, they would be planting Avalanche with their own boots on the ground. “In the Avalanche ecosystem, we will develop a cluster of premier assets,” Kon said, urging AVAX projects to participate with the Terra community in order to boost growth.
Do Kwon has previously indicated that they will continue to buy Bitcoin until Terra surpasses Satoshi Nakamoto as the second-largest Bitcoin whale, a target he intends to attain after purchasing $10 billion in BTC. Terra added 5,040 BTC to its reserves this week, raising the total to 35,767.98 BTC.
02 Feb 2023
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