Luna Foundation Guard to add $100M AVAX tokens to UST reserve

Avalanche’s native token (AVAX/USD), has received overwhelming support after it was announced that it would be added to the reserves backing the UST stablecoin. The Luna Foundation Guard (LFG) Plans to buy $100M AVAX tokens to be used for UST reserves.

Following the news, AVAX has received a notable gain in value. The token has gained slightly during the past 24 hours, and it was trading at $86 at the time of writing according to CoinGecko. Currently, AVAX is ranking as the tenth-largest cryptocurrency with a market cap of $23 billion.

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AVAX added to UST reserve

AVAX will be the first major cryptocurrency after Bitcoin (BTC/USD) to be included to the UST reserve. The LFG is already buying Bitcoin to back the UST stablecoin. The foundation has plans to buy $10 billion worth of Bitcoin, and it has so far bought $1.7 billion worth of BTC.

Adding AVAX is a diversification strategy for Terra. According to the founder of Terraform Labs, Do Kwon, choosing AVAX for its UST reserve was triggered by the rapid growth of the network and a growing fan base.

“Avalanche is still a growing ecosystem… a lot of it is fuelled 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 announcement said.

Major boost for Avalanche

The AVAX reserves for the UST stablecoin will be based on the Avalanche blockchain. The LFG has plans that will allow applications on the Terra blockchain to launch a version of the Avalanche blockchain.

The strategic partnership will allow users of the Avalanche blockchain to trade the UST stablecoin against AVAX tokens directly on the Avalanche blockchain. The CEO of Ava Labs, Emin Gun Sirer, noted that the ability of Terra to scale stablecoins would be the major reason behind bringing 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,” the executive said.