After Bitcoin, Terra Buys $100 Million Worth of AVAX As A Reserve for its UST Stablecoin

08. Apr 2022 Posted by Akolkar B on News

Terra Labs seems absolutely unstoppable at this point as the company decided to add Avalanche (AVAX) as a decentralized reserve for its UST stablecoin. The company announced adding $100 million worth of AVAX tokens to its reserves.

 

Terra’s parent - Luna Foundation Guard (LFG) - said that the goal behind purchasing avalanche (AVAX) was “to help bolster its UST Decentralized Forex Reserve and strategically align the two ecosystems”.

 

Terra has already announced that it will be buying $10 billion worth of Bitcoins as a reserve for its UST stablecoin. Over the last month, it has already acquired $1.7 billion worth of BTC. Terra said that by adding Avalanche (AVAX) to its reserve, it will be diversifying that strategy.

 

Do Kwon, founder of Terraform Labs said that the Luna Foundation Guard (LFG) has chosen avalanche (AVAX) because of its rapid growth and growing fan base.

 

Both - Avalanche and Terra - are Layer-1 blockchain protocols allowing users to build different projects relating to decentralized finance (DeFi) and non-fungible tokens (NFTs). Kwon further added: “Avalanche is still a growing ecosystem...a lot of it is fueled by loyalty to the AVAX token and users feel a lot of affinity with an asset that aligns itself with AVAX. Whereas for the average Ethereum user, aligning yourself with Ether doesn’t really mean that much.”

 

Kwon noted that Bitcoin (BTC) will still remain the main backing of the UST stablecoin. However, the deal with avalanche “buys a lot of user familiarity” he adds.

 

But unlike the Bitcoin reserve is placed on the Terra blockchain, the Avalanche (AVAX) reserve will stay on the Avalanche blockchain. The strategy partnership with LFG will allow Avalanche users to trade UST for AVAX tokens on the Avalanche blockchain.

 

Furthermore, going ahead, several applications on the Terra blockchain will also be launching a version on the Avalanche blockchain. Emin Gün Sirer, CEO of The Ava Labs, Avalanche’s developer said that Terra ability to scale its stablecoin is one of the key reasons behind this partnership. “I wish that more and more coins would look for ways to grow the crypto space as opposed to compete for the same set of people,” he said.

 

Terra has been making all move to back its UST stablecoin and increase its stability by pegging it to top decentralized digital such as Bitcoin. This has also made its native cryptocurrency LUNA as one of the top-performing digital assets.