Big Plans For Avalanche
Terra announced on Thursday that it had bought Avalanche (AVAX) tokens worth $100 million in a “treasury swap” between LUNA and AVAX. This helped Terra build up its reserves. There was an OTC deal to add these AVAX tokens to UST’s reserves. This makes AVAX the first major cryptocurrency other than bitcoin to be added to the stablecoin’s reserve, making it the first big one.
There will be new $UST-based protocols in the Avalanche ecosystem that TFL wants to build and support. TFL has also done a separate $100 million Treasury Swap for AVAX to show its support for Avalanche. The announcement on Twitter said that.
Terra, whose purchases are backed by the Luna Foundation Guard (LFG), said that the AVAX swap was “the beginning of a diversified and non-correlated asset pool that will support the $UST peg.” This means that Terra could add other cryptocurrencies in the future. Not only will Terra’s UST reserve be bolstered by the AVAX purchase, but it will also help both ecosystems grow by connecting the Avalanche ecosystem to the LUNAtics and Terra builders. This will allow both ecosystems to thrive.
Terra has been accumulating a lot of Bitcoin, which it plans to use to back TerraUSD, the Terra network’s main stablecoin and the top decentralized stablecoin in DeFi by market cap. The AVAX foray comes after that.
Avalanche is one of the most exciting ecosystems in the world for web3.
In web3, “No one can deny that avalanche is one of the most exciting ecosystems in the world.” tweet Do Kwon, Terraform Labs’ founder and CEO after the company was bought. He said that he thinks the future of blockchain networks will be cross-chain, and that the alliance between Avalanche and Terra is the largest in web3.
Terra now plans to use the AVAX that LFG bought from Terra “to build a large reserve against $UST using the automated mint mechanism that was designed for $BTC.” People who want to make and get layer 1 coins can do this because UST will be linked to AVAX, which means that it can be made and sold for the layer 1 coin.
For projects that use UST in the AVAX ecosystem, Kwon said they would start to “cwover initial bootstrapping costs” for some of them, which would include audit costs for some projects. They would also be putting their feet down to grow Avalanche. Our goal is to build a cluster of the best Avalanche resources, Kon said. Terra projects should get involved with the Terra community so that growth can happen, he said.
In the past, Kwon has said that they won’t stop buying Bitcoin until Terra is the second-largest Bitcoin whale after Satoshi Nakamoto, which he hopes to do after buying $10 billion worth of BTC. Terra has bought an extra 5,040 BTC this week, bringing its total to 35,767.98 BTC.
