Do Kwon, Terra’s founder, said in March that the blockchain network would purchase $10 billion in Bitcoin as a reserve for its algorithmic stablecoin, UST. The network has purchased $1.6 billion of the main digital asset, and sources indicate that it is extending its reserve for UST to another digital asset, Avalanche.
Terra purchased $100 million in AVAX. The network made this acquisition via an OTC trade with the Avalanche foundation, which was described as a move to “strategically align ecosystem incentives.”
Terra said that the acquisition shows its commitment to cross-chain collaboration and development with the Avalanche blockchain. Interestingly, this relationship has led to Pangolin, an Avalanche-based decentralised exchange, using UST as the default token on its platform. Do Kwon said that the non-profit charged with establishing the reserve, Luna Foundation Guard (LFG), picked AVAX due to its growth and strong community.
While the AVAX acquisition suggests that the asset would also be used to support UST, Kwon clarified that Bitcoin will remain the primary asset used to back the stablecoin. The acquisition is intended to increase UST’s visibility on the Avalanche blockchain.
With a market valuation of $16.7 billion as of press time, Terra’s UST has emerged as one of the top stablecoins in the field. The network’s native token, LUNA, on the other hand, is a top 10 digital asset with a market valuation of over $37 billion.
