The Avalanche Foundation completed the repurchase of 1.97 million AVAX tokens from the now-defunct Luna Foundation Guard (LFG), which had acquired them to support the Terra blockchain ecosystem.
In an announcement sent to Cointelegraph, the Avalanche Foundation said it had completed the token buyback process.
While Avalanche’s filing said it would purchase the tokens at $45.5 million, the Avalanche (AVAX) token traded at $26.95 at the time of writing, making 1.97 million tokens worth about $53 million at current market prices.
Avalanche’s seven-day price chart. Source: Cointelegraph Markets Pro
LFG bought $100 million AVAX in 2022
In 2022, Terraform Labs founder Do Kwon established the LFG to protect Terra’s TerraUSD (UST) stablecoin. At the time, LFG built reserves by acquiring Bitcoin (BTC) and altcoins, including $100 million worth of AVAX, to stabilize UST, then valued at $16.7 billion.
Apart from the LFG purchase, Terraform Labs swapped $100 million worth of Terra (LUNA) tokens for AVAX to “strategically align ecosystem incentives.”
Still, Terra’s crash soon followed. By May 2022, UST lost its dollar peg, leading to a significant price drop in LUNA and the broader collapse of the Terra ecosystem.
Related: South Korean police request exchanges freeze LFG related funds
Avalanche Foundation buys back 1.97 million tokens from LFG
Since then, the Avalanche Foundation has been working to repurchase the tokens from LFG. On Oct. 12, the foundation announced that it had negotiated an agreement to buy them back. Avalanche said this would ensure that LFG would not violate their original agreements. It wrote:
“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.”
In the Avalanche Foundation’s latest announcement, the organization said that the token buyback is an “important step” in its efforts to support the sustainability of the Avalanche ecosystem.
The nonprofit also highlighted that the tokens will be used to strengthen its initiatives like grants, events and incubators.
Magazine: Terra collapsed because it used hubris for collateral — Knifefight
Comments (No)