The Avalanche Foundation has completed the buyback of 1.97 million AVAX tokens initially purchased by the now-defunct Luna Foundation Guard (LFG) to support the Terra blockchain ecosystem.
The foundation confirmed to Cointelegraph that it had finished this buyback, closing a chapter in the Terra saga for good.
Avalanche Foundation Completes Buyback of 1.97 Million AVAX Tokens
The tokens were acquired at a price of $45.5 million by the Avalanche Foundation, but with AVAX now trading around $26.95, these repurchased tokens are worth approximately $53 million, marking a notable gain. At the time of the buyback, the AVAX token was up over 3% on the last day, with a market cap of $10.93 billion.
Avalanche’s relationship with Terra dates back to early 2022 when Terraform Labs founder Do Kwon launched the Luna Foundation Guard to stabilize the TerraUSD (UST) stablecoin.
To support UST, the LFG accumulated significant reserves, including $100 million worth of AVAX. These reserves aimed to keep UST’s value steady, pegged to the dollar, as its market cap reached $16.7 billion.
In addition to the LFG’s AVAX purchase, Terraform Labs also swapped $100 million worth of Terra (LUNA) tokens for AVAX as part of a larger plan to “strategically align ecosystem incentives” between the two blockchain networks.
But this alignment fell apart when Terra experienced a severe collapse. By May 2022, UST lost its dollar peg, triggering a dramatic crash in LUNA’s price and leading to the wider collapse of the Terra ecosystem.
Avalanche and Terra Relation
Initially meant to connect the two ecosystems, this relationship left the Avalanche Foundation facing setbacks from Terra’s crash, much like many other projects involved with Terra. With Terra’s stablecoin and its ecosystem gone, Avalanche refocused on buying back the AVAX tokens once held by the LFG, working to recover from the Terra crisis.
This repurchase is a significant milestone in the Avalanche Foundation’s effort to regain control over its assets and distance itself from Terra’s fallout. Avalanche’s successful buyback of AVAX tokens signals a strategic step toward strengthening its place in the blockchain space.
The foundation’s commitment to rebuilding, along with its growing market cap, suggests it is positioned for future growth, despite the challenges posed by the Terra crisis.