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Terra Update: LFG buys $100 million worth of AVAX, partners with Avalanche to launch gaming subnets, AVAX to support UST minting and redemption

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Terra Update: LFG buys $100 million worth of AVAX, partners with Avalanche to launch gaming subnets, AVAX to support UST minting and redemption

After several recent increases in Bitcoin holdings, the Terra support organization LFG announced the purchase of $100 million worth of Avalanche protocol tokens AVAX, in a move to expand its UST foreign reserves beyond BTC.

Enhancing Decentralization of UST Forex Reserves

According to a press release, the Terra non-profit organization Luna Foundation Guard (LFG) has purchased $100 million Avalanche (AVAX) through over-the-counter trading, making AVAX the first asset outside of Bitcoin to be added to the UST reserve assets.

The official Terra announcement on Twitter states:

This signifies the beginning of a diverse, unrelated asset reserve linked to UST. Terraform Labs (TFL) is committed to building and supporting UST native protocols on Avalanche to further expand cross-chain footprint. Executing this independent $100 million AVAX treasury purchase demonstrates our commitment to Avalanche.

Nicholas Platias, Head of Research at Terraform Labs, pointed out that having a diversified asset pool makes the UST forex reserves stronger, able to withstand volatility and alleviate arbitrage pressure on UST in the market.

Launching Game Subnet with Avalanche

After deploying the fixed-rate protocol xAnchor on Avalanche on March 17, other Terra native protocols are also considering expanding to Avalanche. The Terra official announcement revealed that the two parties will collaborate to launch a game-focused application chain on the Avalanche subnet, with further details to be announced later.

Emin Gün Sirer, founder of Avalanche, mentioned on Twitter that this marks the beginning of creating innovative asset classes and more powerful applications between the two, looking forward to more Terra native applications expanding to Avalanche.

He also emphasized excitement about the game subnet they will jointly launch, unable to disclose details at this time.

Avalanche to Support UST Minting

After the market digested the above information, Terra founder Do Kwon released another major announcement, stating that besides providing a large reserve for UST in the LFG treasury, UST will soon be able to mint and redeem on Avalanche through AVAX.

https://twitter.com/stablekwon/status/1512291560171311108

He emphasized that Avalanche is one of the most exciting ecosystems in Web3, and many public chains will become Avalanche subnets in the future. Do Kwon pointed out the benefits brought by other collaborations:

  1. Once UST gains adoption on Avalanche, AVAX will become scarcer, leading to stablecoin and L1 growth synchronization.
  2. Terraform Capital will begin releasing ecosystem development funds for specific projects to promote UST adoption.
  3. TFL will also expand its ecosystem on Avalanche, including the recently deployed Anchor Protocol and the upcoming Nebula Protocol.