Avalanche bought back $53M of AVAX tokens from Terra LFG
The Avalanche Foundation has completed the purchase of 1.97 million AVAX tokens from the now defunct Luna Foundation Guardian (LFG), which it acquired to support the Terra blockchain ecosystem.
In an announcement sent to Cointelegraph, the Avalanche Foundation said it had completed the token return process.
While Avalanche's filing said it will buy tokens for $45.5 million, Avalanche (AVAX) tokens were trading at $26.95 at the time of writing, with 1.97 million tokens at a current market value of $53 million.
Avalanche Seven Day Price Chart. Source: Cointelegraph Markets Pro
LFG buys AVAX for $100 million in 2022
In the year In 2022, Do Kwon, founder of Terraform Labs, established LFG to protect the TerraTeraUSD (UST) stablecoin. At the time, LFG built a reserve by acquiring Bitcoin (BTC) and altcoins to stabilize the UST, then worth 16.7 billion dollars.
In addition to the LFG purchase, Terraform Labs exchanged $100 million worth of Terra (LUNA) tokens for AVAX to “strategically align ecosystem incentives.”
However, Terra's crash soon followed. In May 2022, the UST lost its dollar peg, causing a significant price drop in LUNA and a wider collapse of the Terra ecosystem.
RELATED: South Korean police ask to clamp down on funds linked to LFG
Avalanche Foundation bought 1.97 million tokens from LFG
Since then, the Avalanche Foundation has been working to purchase tokens from LFG. On October 12, the foundation announced that it had negotiated an agreement to buy them back. Avalanche says this confirms that LFG will not violate their original agreement. He wrote:
“This action ensures that LFG does not violate the Master Agreement's restrictions on the use of tokens and protects against the complexity of a bankruptcy trustee's liquidation while returning the 1.97M AVAX to the foundation's holdings.”
In a recent announcement from the Avalanche Foundation, the organization said the token purchase was an “important step” in its efforts to support the sustainability of the Avalanche ecosystem.
The charity suggests that the tokens will be used to bolster initiatives such as endowments, events and incubators.
Magazine: Terra falls because she uses hubris as leverage – Knifefight
