$200 Million Worth of AVAX Bought by Terra for UST’s Reserves

$200 million worth of AVAX tokens from the Avalanche Foundation has been purchased by Terraform Labs (TFL) and the Luna Foundation Guard (LFG), according to an announcement.

According to a tweet on Terra’s official Twitter account, the company behind the development of the Terra blockchain, TPL, has swapped $100 million worth of Terra’s native token, LUNA, for AVAX tokens. The tweet went on to say that the reason for this swap is to “strategically align ecosystem incentives”.

The non-profit organization, TFL, who is authorized to build Terra’s UST reserves, used its own UST holdings to purchase an additional $100 million worth of AVAX from the Avalanche Foundation.

These purchases should reinforce UST’s stability, which currently has a market capitalization of $16.7 billion.

In an interview with Bloomberg, the founder of Terraform Labs, Do Kwon, said that LFG had chosen AVAX for its UST reserves due to the consistent growth of the blockchain’s ecosystem, as well as its loyal user base.

Kwon said “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.”

Terra’s UST is currently ranked 14th in market capitalization with its market cap at $16.72 billion, according to CoinMarketCap. UST is the 4th biggest stablecoin in the market, 1 position lower than Binance USD (BUSD), 9 positions lower than USD Coin (USDC), and 11 positions lower than Tether (USDT).