Terra Luna and Avalanche have announced a strengthening of their collaboration in the form of a $100 million treasury swap between LFG (Luna Foundation Guard) and the Avalanche Foundation.
Do Kwon, the founder of Terraform Labs, which powers the Terra blockchain, has recently been publicly buying bitcoin in order to back its UST stablecoin reserve. He added another $230 million in bitcoin on Wednesday and claims to be buying up to $10 billion in total over time.
The $100 million OTC purchase of AVAX makes it the biggest crypto asset outside of BTC to be added to the reserve, yet further bolstering the non-correlated asset pool, and also helping to support the UST dollar peg.
TFL (Terraform Labs) has committed to building and supporting UST-native protocols in the Avalanche ecosystem. The $100 million treasury swap for AVAX is a further sign of this commitment.
Another advantage is the fact that LUNAtics and Terra developers are now able to build cross-chain and make use of the vibrant Avalanche ecosystem. Several Terra-native DeFi protocols are already in line for a potential cross-chain expansion to Avalanche.
The Avalanche subnets are also ready to come into play. Terra and Avalanche have already spent time collaborating on a gaming subnet, details of which are still to be released.
Avalanche is currently the 10th largest cryptocurrency by market cap, and Terra Luna is in 8th position. The collaboration between the two could certainly help them both to grow. Do Kwon spoke of the union with Avalanche in a quote from a Bloomberg article on the matter.
“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,” Kwon said. “Whereas for the average Ethereum user, aligning yourself with Ether doesn’t really mean that much.”
He added:
“While Bitcoin will remain the “main backing” of UST stablecoin, the deal with Avalanche “buys a lot of user familiarity” for UST and Terra from Avalanche,”
Emin Gün Sirer, CEO of Ava Labs, said of the collaboration:
“Terra’s ability to scale their stablecoins is one of the reasons that drew Avalanche to its platform.”
“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.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: https://cryptodaily.co.uk/2022/04/terra-and-avalanche-join-forces