Terra is diversifying its reserves beyond Bitcoin as it starts accumulating the Avalanche native token, AVAX. On April 7, the Singapore-based nonprofit organization Luna Foundation Guard announced a $100 million treasury swap with the Avalanche Foundation.
The organization behind the Terra ecosystem, Terraform Labs (TFL), swapped $100 million worth of LUNA tokens for AVAX tokens.
The deal boosts the reserves of the UST stablecoin and expands its treasury beyond Bitcoin. UST is currently the fourth-largest stablecoin with a market capitalization of $16.7 billion.
“TFL is committed to building & supporting new $UST-native protocols within the Avalanche ecosystem to maximize its cross-chain footprint and has executed the separate $100 million Treasury Swap for AVAX to demonstrate its commitment to Avalanche.”
Building on BTC reserves
The UST stablecoin is already backed by Bitcoin in a reserve that the company plans to increase to $10 billion. It purchased a further $230 million in BTC this week and has added more than $1 billion worth since the end of January. According to the LFG wallet address, it holds 35,768 BTC worth an estimated $1.56 billion at current prices.
Terraform Labs founder, Do Kwon, told Bloomberg why they selected Avalanche over other options such as Ethereum.
“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.”
The strategic partnership will also allow Avalanche users to trade UST for Avalanche tokens directly on its own blockchain. The AVAX reserve will also remain on the Avalanche network as Terra seeks to launch protocols on the Avalanche blockchain.
Emin Gün Sirer, CEO of Avalanche developer Ava Labs, commented “I wish that more and more coins would look for ways to grow the crypto space as opposed to competing for the same set of people,”
AVAX, LUNA muted price reactions
There has been no real boost for AVAX prices which have increased just 4.8% over the past 24 hours. The coin was trading at $88.40 at the time of press, down 7.8% over the past week. AVAX is currently down 39% from its November all-time high of $145.
LUNA is faring worse with a 4.9% decline on the day. LUNA, which helps to stabilize the Terra stablecoin, was trading at $102.81 at the time of press. It has lost 13% since its April 5 all-time high of $119.