LFG acquires AVAX worth $ 100 million to build up reserves

LFG acquires AVAX worth $ 100 million to build up reserves

The Luna Foundation Guard (LFG) acquired $ 100 million of the native tokens Avax of the Avalanche Foundation to build up the reserves of your stable coin VAT.

LFG, the non-profit organization, which was founded to support Terra, has the long-term goal of acquiring Bitcoin worth $ 10 billion for VAT reserves. On Wednesday, Do Kwon, CEO from Terraform Labs, confirmed that LFG bought further bitcoins worth $ 231 million, which increases its total ownership to more than $ 2 billion.

The decision of LFG to keep reserves in Avax to Ethereum or another defi token may sound surprisingly, but industry representatives say that the avalanche community is a major attraction.

"I think you chose Avax because this token exchange has a dent in this ecosystem and the local AVAX users can win over," said Jordi Alexander, Chief Investment Officer at Selini Capital. "The Avax market capitalization is 18 times smaller than ETH, so it's a sensible partnership."

A 100 million dollar swap corresponds to almost 0.5 % of the market capitalization of Avax, while an etheric purchase would hardly leave a dent in the same amount, said Alexander, which makes it a good opportunity to bring new fans and users to VAT.

"The StableCoin landscape is less developed in Avalanche, and so this is a way to continue to position VAT as a stable coin of choice," said Santiago Santos, Business Angel and co-moderator of the Empire Podcast of Blockworks. "Ethereum is a more saturated ecosystem."

"You are already on AVAX with Anchor, so it is a logical next step to consolidate this support from a place of strength," added Alexander, referring to the Anchor protocol, which is native and will start a native version on Avalanche as part of the partnership.

KWON agreed that the community aspect of avalanche and the loyalty of the user for Avax played a role in the decision, he said Bloomberg .

luna's takeover of $ 100 million in Avax is only the beginning of the introduction of Valanche under Avalanche Defi applications, said Emin Gun Sirer, CEO of AVA Labs, in A Awarding .

In March, Ava Labs, the team behind the Avalanche Blockchain, An announced with Aave, Goldentree Asset Management, Valkyrie Funds, Wintermute, Jump Crypto and Securitize to build the first Kyc-compliant, horizontally integrated blockchain developed for institutional defi.

The team also presented the Avalanche multi-verses, a program of up to $ 290 million for promoting the growth of its subnet skills, which is used to validate blockchain and the enabling of scalable, application-specific networks.

"The latest partnership of AVA Labs ... will benefit from this project," said Spencer Hughes, Research Analyst at Blockworks. "Sirer also mentioned that Luna and Ava Labs will work together to start a gaming subnet that offers users an independent, scalable application network."

There is speculation that Avax, although it is widely supported by its community, may not be as safe as an Ethereum as a reserve currency.

"I would be concerned if Avax would be a very large percentage of reserves, but in my opinion the diversification of the reserve basis is slightly advantageous," said Santos. "That means everything in crypto is still very correlated. The problem is that you cannot access attachable assets, which restricts the possibilities."

santos said he was not surprised if LFG would choose to add ether ether and other assets to the reserves in the future.

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The contribution LFG acquires AVAX worth $ 100 million to build up reserves.