It seems the crypto industry has learned its lesson about backing stablecoins with fiat – or with fiat rumors. In any case, Terra has gotten the job done and is far from going the same route as the nonprofit is buying Bitcoin to support the TerraUSD [UST] stable currency.
But now the Luna Foundation Guard seems to be diversifying its reserve and has plans to add another alt to the family.
Far from a chilly reception
According to a Bloomberg report, Terra’s Luna Foundation Guard will “take over” Avalanche [AVAX] worth $100 million to add to the existing reserve for UST. So far, the reserve has more than $1 billion worth of Bitcoin, which has certainly boosted crypto investors’ confidence in the asset.
However, Terraform Labs co-founder Do Kwon confirmed that Bitcoin would continue to make up the bulk of the reserve. Earlier, on an episode of the Unchained podcast, Kwon talked about how LUNA and UST are working together, with LUNA expanding and contracting to support the value of this stablecoin.
At the time of writing, LUNA traded for $102.82, after falling 4.54% in the past 24 hours, but up 0.71% in the past week. It was the ninth largest cryptocurrency by market capitalization.
So the UST reserve is diversifying, for sure. But why did Terra’s Luna Foundation Guard choose AVAX, the tenth largest cryptocurrency by market capitalization at press time, instead of a heavier player like Ethereum [ETH]BNB [BNB]Solana [SOL]or even Cardano [ADA]†
According to Do Kwon, that was a well-considered decision because the founder felt that users could better align with AVAX’s ‘user knowledge’. This is important because it shows how market caps are not the end in crypto. In fact, brand image and community involvement play a powerful role in shaping deals like this one.
Time to go snowboarding
At the time of going to press, AVAX switched wallets at $88.55 after rising 4.80% over the past day. In the past week, however, it fell 5.82%.
In that regard, trading volume has been on the rise since about March 28 and has seen a consistent recovery despite AVAX’s price declines. Fluctuations in trading volume are quite common with AVAX and this is another sign of consistent user adoption and growth.
This post Terra prefers AVAX over ETH, BNB and SOL to UST. to support
was published first on https://ambcrypto.com/terra-chooses-avax-over-eth-bnb-and-sol-to-back-ust/