CDS Crypto News Avalanche Foundation Repurchases 1.97 Million AVAX Tokens from Defunct LFG
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Avalanche Foundation Repurchases 1.97 Million AVAX Tokens from Defunct LFG

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Avalanche Foundation Repurchases 1.97 Million AVAX Tokens from Defunct LFG

Avalanche Foundation Repurchases of Former Terra-Linked AVAX Tokens

Avalanche Foundation Repurchases 1.97 Million AVAX Tokens from Defunct LFG

The 1.97 million AVAX tokens that the now-defunct Luna Foundation Guard (LFG) had purchased to promote the Terra blockchain ecosystem have been fully repurchased by the Avalanche Foundation. The Avalanche token was trading at $26.88 at the time of writing, meaning that 1.97 million tokens were worth almost $53 million at current market rates, even though Avalanche’s filing stated that it would buy the tokens for $45.5 million.

Do Kwon’s TerraUSD Crash: How LFG’s AVAX and Bitcoin Reserves Couldn’t Prevent Collapse?

Do Kwon, the founder of Terraform Labs, created the LFG in 2022 to safeguard Terra’s TerraUSD (UST) stablecoin. In order to support UST, which was then worth $16.7 billion, LFG established reserves at the time by purchasing Bitcoin and other cryptocurrencies, including $100 million worth of AVAX.

In order to strategically align ecosystem incentives, Terraform Labs exchanged $100 million worth of Terra (LUNA) tokens for AVAX in addition to the LFG acquisition. However, Terra’s crash came shortly after. By May 2022, UST had lost its dollar peg, which caused LUNA’s price to plummet and the Terra ecosystem as a whole to collapse.

The goal of the Avalanche Foundation has been to buy back the tokens from LFG ever since. The foundation declared on October 12 that it had reached a deal to repurchase them. This would guarantee that LFG wouldn’t break their initial promises, according to Avalanche.

This action ensures that LFG would not violate the original agreement’s restrictions on the tokens’ use and shields the tokens from the complexity of a bankruptcy trustee liquidation while returning 1.97M AVAX to the Foundation’s holdings.

Avalanche

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Avalanche Foundation Repurchases 1.97 Million AVAX Tokens from Defunct LFG
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