Ethereum Layer-1 competitor Avalanche (AVAX) got a big boost when the Luna Foundation Guard announced it is adding $100 million in AVAX to its UST reserves.

Following the news, AVAX is trading 7% higher at a price of $88 as the tenth largest cryptocurrency with a market cap of $23 billion. This also makes Avalanche (AVAX) the first major cryptocurrency outside of Bitcoin to be added to the UST reserve.

The Singapore-based nonprofit – Luna Foundation Guard – has pledged to buy $10 billion worth of Bitcoin (BTC) as UST reserves. Of which it has already acquired $1.7 billion worth of BTC. This new acquisition of Avalanche (AVAX) comes as a key diversification strategy for Terra.

Do Kwon, founder of Terraform Labs, said the Luna Foundation chose Guard Avalanche as a UST reservation because of its rapid growth and increased fan base. Speaking to Bloomberg, Kwon said:

“Avalanche is still a growing ecosystem… much of it is fueled by loyalty to the AVAX token and users feel a lot of affinity with an asset that aligns with AVAX. While for the average Ethereum user, tuning yourself into Ether isn’t so much stands for.”

What does it mean for avalanche?

Unlike LFG’s Bitcoin reserve which rests on the Terra blockchain, AVAX reserves will rest on the Avalanche blockchain. In the future, several applications on the Terra blockchain will also launch a version for the Avalanche blockchain.

In addition, this strategic partnership will also allow Avalanche users to trade UST against Avalanche tokens directly on the avalanche blockchain.

Emin Gün Sirer, CEO of The Ava Labs, Avalanche’s developer, said Terra’s ability to scale stablecoins is one of the main reasons for pulling Avalanche to its platform. He added:

“I wish more and more coins would look for ways to grow the crypto space instead of competing for the same group of people.”

Disclaimer

The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication is not responsible for your personal financial loss.

About the author

Bhushan is a FinTech enthusiast and has a good flair in understanding financial markets. His interest in economics and finance draws his attention to the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In his spare time, he reads thriller-fiction novels and sometimes explores his culinary skills.



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