TL;DR Breakdown
- Terra Foundation is set to acquire a huge chunk of AVAX tokens in order to back its stablecoin UST
- The Foundation was previously on a hunting spree for Bitcoin as it aimed to accumulate BTC $10 billion
- Furthermore, there will be a $100 million Treasury Swap between TFL and the Avalanche Foundation
As per a report from Bloomberg, Terra Foundation has once again gained the attention of the entire world by partnering with Avalanche, which is known for its scalability, speed, and increased efficiency. It is now a fact that in order to back the UST stablecoin, which is Terra’s native stablecoin, the Foundation will purchase AVAX tokens.
In order to back any stablecoin to confirm the stability of its prices, there should be a number of assets underneath that stablecoin so that de-pegging of the token can be eliminated. As Cryptopolitan recently reported, Terra Foundation has already acquired over $1.2 billion worth of Bitcoin since January. AVAX will become the second cryptocurrency in Terra’s UST treasury, per the latest report.
Terra to purchase AVAX tokens
Terra confirmed the same via a series of tweets wherein the platform revealed a “blossoming collaboration” with Avalanche, which will be furthered by a $100 million Treasury Swap between TFL and the Avalanche Foundation to “strategically align ecosystem incentives!”
The official Twitter handle from the Terra project confirmed that the OTC deal between the platform and the layer one solution makes “makes AVAX the first major crypto-asset besides $BTC to be added to the UST Reserve, marking the beginning of a diversified and non-correlated asset pool supporting the $UST peg.”
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.
Revealed another tweet
Avalanche will benefit as well
Not only will UST benefit from this new OTC deal, but Avalanche will also gain a lot from the same. This new cross-chain experience for the developers and the users as well. Furthermore, as the xAnchor is currently being implemented on the Avalanche network, other DeFi protocols on the Terra blockchain aim to expand with Avalanche.
Furthermore, the two networks also have planned to build gaming subnets, something which will be explained in the coming days to the “LUNAtics.”It is important to note that the LUNA Foundation Guard has included $100 million worth of AVAX into the Treasury, backing UST, while the $100 million Treasury Swap with TFL exhibit the significant advantages of mutual collaboration between layer one communities in crypto.
Source: https://www.cryptopolitan.com/terra-set-to-expand-assets-backing-ust/