Avalanche is one of the most outstanding blockchains. Nowadays, this scalable blockchain network is presently the 10th largest blockchain platform by a market cap of $22.3 billion. Avalanche’s speed and low cost are some of its biggest features. As a result, Web3 developers all flock to the platform, hoping to scale their projects.
For example, Terraform Labs founder, Do Kwon, is one of the newest names to go bullish on Avalanche. Kwon has lately publicized his intention of seeing stablecoin-focused blockchain Terra (LUNA) emerge among the top 2 leading platforms. Let’s discover more about this important milestone in Avalanche.
Terraform and Luna Foundation Guard Purchases $200 million worth of AVAX
Terra recently announced a $200 million purchase of AVAX tokens from the Avalanche Foundation to add to its TerraUSD reserves. This appears to be a smooth move to advance cross-chain development and diversity.
The Luna Foundation Guard (LFG) and Terraform Labs (TFL) are the two organizations behind the Terra blockchain. Both announced that they had purchased $200 million in AVAX tokens. In addition, Ava Labs, which is behind Avalanche, confirmed that LFG purchased $100 million in AVAX tokens in exchange for its UST stablecoin in an over-the-counter (OTC) trade.
1/ Thrilled to reveal the blossoming collaboration between @avalancheavax and Terra will also be further solidified with a $100 million Treasury Swap between TFL and the Avalanche Foundation of $LUNA <> $AVAX to strategically align ecosystem incentives!https://t.co/z9A86CWZDs
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) April 7, 2022
This was done to strategically align community incentives. Furthermore, Terra launched the treasury swap to demonstrate its support for Avalanche for future partnership and development. Avalanche and Terra appear to have further collaborations in store, which they will announce later.
Also, Ava Labs’ President, Jon Wu, expressed his excitement over the new collaboration. He said, “AVAX is an excellent reserve asset to complement bitcoin in the LFG treasury. This is just the beginning for these two communities together. We’ll see more assets, applications, and novel subnet collaborations flourish out of this new connection.”
On the other hand, before its AVAX purchase, LFG made a huge investment in Bitcoin. It purchased $231 million in bitcoin to increase its UST reserves. However, the AVAX purchase looks to be the first instance where LFG has purchased another crypto. Although AVAX has a far lesser market share than bitcoin, LFG is already a massive market participant of AVAX.
Avalanche’s Growth is a Huge Bait
According to Do Kwon, Avalanche’s growing ecosystem was why LFG chose to make the purchase instead of other blockchain platforms. Kwon further noted that LFG was impressed by Avalanche’s user devotion. This strong user base signifies better development potential for Avalanche.
In addition, Kwon later issued a new series of tweets, giving further details about this purchase. Sharing a screenshot of Avalanche’s TVL, he wrote:
2/ Today, none can deny that @avalancheavax is one of the most exciting ecosystems in web3.
It is currently one of the most heavily trafficked L1s with hundreds of apps spanning DeFi and gaming.
The numbers are great: https://t.co/94wrwADfhH
— Do Kwon 🌕 (@stablekwon) April 8, 2022
Then, Kwon has high hopes for Avalanche’s future. He further expressed his belief in the future of blockchain networks being cross-chain. Kwon added that many of those chains will be Avalanche subnets.
Furthermore, Kwon shared more details to back his claims that the Terra-Avalanche partnership is the biggest in Web3. He wrote in a thread, “First, the $AVAX acquired by @LFG_org will be used to provision a large reserve against $UST using the automated mint mechanism identical to one designed for $BTC. = $UST will be able to be minted and redeemed against $AVAX, on Avalanche.”
AVAX to Become Rare with Time
Furthermore, as $UST usage on Avalanche develops, $AVAX will become rare. Kwon also stated that Terraform would begin to subsidize initial bootstrapping costs for chosen projects in the Avax ecosystem that employ $UST. In addition, Terraforms will reimburse audit costs.
6/ This means that as $UST adoption grows on Avalanche, $AVAX becomes more scarce – aligning the growth of the stablecoin with the L1's developers and users.
— Do Kwon 🌕 (@stablekwon) April 8, 2022
Ending his tweet, Kwon issued a rallying call for Avax projects to engage with the Terra community.
9/ We call on every @avalancheavax project to engage with the Terra community to grow together.
Decentralized economies need decentralized money, and happy to work on blitzscaling Avalanche's for the years to come.
🤝 @el33th4xor @kevinsekniqi @luigidemeo
— Do Kwon 🌕 (@stablekwon) April 8, 2022
As of writing, AVAX trades at $83.48 with a 24-hour trading volume of $461.6 million. Here’s an article about the recent trends on Avalanche.
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