The Luna Foundation Guard announced on Thursday that it had reached an agreement with the Avalanche Foundation to purchase $100 million worth of AVAX, the native asset of the Avalanche blockchain. LFG is a non-profit that uses the Terra (LUNA) network and the blockchain’s algorithmic stablecoin UST to promote decentralized finance (defi). The purpose of LFG’s purchase of AVAX was to “help reinforce its UST Decentralized Forex Reserve and strategically integrate the two ecosystems,”
That’s, according to the company.
The transaction will be handled over-the-counter (OTC) by both LFG and the Avalanche Foundation. Following the recent bitcoin (BTC) backing, AVAX will become the second non-correlated asset in the UST Reserve.
LFG will pay for the AVAX using the stablecoin UST, according to a press announcement supplied to Bitcoin.com News. The announcement comes on the heels of Anchor Protocol’s addition of AVAX support.
On March 17, Anchor CEO Ryan Park stated that Avalanche is now supported by Anchor via Xanchor (Cross Anchor), which is a “extension to Anchor Protocol.”
“The basis of the UST Reserve is to provide a backstop against UST peg deviations in times”
“of large contractions in UST demand exogenous to Terra’s algorithmic model,”
So, noted Nick Platias, a member of LFG’s Governing Council on Thursday.
Platias went on to address the advantages of diversification in terms of safeguarding the UST Reserve.
Avalanche users will be able to trade UST for AVAX onchain on the Avalanche blockchain, according to the statement.
The Avalanche Foundation’s director, Emin Gün Sirer, said in a statement on Thursday,
“We are happy that our partners at LFG will be adding AVAX to their fast-growing UST reserve.”
“Decentralized stablecoins like UST are proven to be essential in crypto ecosystems,”
” and AVAX serves as an excellent reserve asset alongside BTC.”
“We’re also excited to work together on projects that will help the Terra”
“and Avalanche ecosystems thrive even further,”
So,nGün Sirer adds.
