- Avalanche Foundation finalized repurchase of AVAX tokens from Luna Foundation Guard after Terra ecosystem’s collapse.
- Originally priced at $45.5 million, current market value of tokens is $53 million.
- Repurchased tokens will support Avalanche initiatives, including grants and incubator programs.
The Avalanche Foundation has successfully repurchased 1.97 million AVAX tokens from the Luna Foundation Guard (LFG), an organization established to support Terra’s now-collapsed ecosystem. In a statement shared with Cointelegraph, Avalanche confirmed that it had concluded the token buyback, originally valued at $45.5 million. However, as of recent market rates, the tokens are now worth around $53 million.
Source: CoinMarketCap
The History Behind the AVAX Purchase
LFG acquired AVAX tokens in 2022 as part of its reserve strategy to stabilize Terra’s UST stablecoin, which had reached a valuation of $16.7 billion at its peak. Do Kwon, the founder of Terraform Labs, launched LFG with the goal of protecting UST’s dollar peg by accumulating reserves in various assets, including Bitcoin and AVAX. Alongside its AVAX purchase, Terraform Labs also traded $100 million worth of Terra (LUNA) tokens for AVAX, aiming to strengthen ties within the two ecosystems.
However, this strategy was soon challenged by the dramatic fall of Terra. In May 2022, UST lost its peg to the dollar, triggering a significant price drop in LUNA and leading to the eventual collapse of the Terra ecosystem.
A Strategic Repurchase for Avalanche
Following the Terra crisis, the Avalanche Foundation took steps to repurchase the AVAX tokens from LFG to ensure they remained in line with the original agreements. On October 12, the foundation reached an agreement to buy back the tokens, protecting them from potential liquidation issues and reaffirming Avalanche’s control over its assets. In a statement, the foundation highlighted that this move prevents complications from a potential bankruptcy trustee liquidation and brings 1.97 million AVAX tokens back into its holdings.
Avalanche announced that the repurchased tokens would play a crucial role in supporting the foundation’s ongoing programs, such as grants, events, and incubator initiatives, which are designed to foster growth and innovation within the Avalanche ecosystem. The foundation emphasized that this buyback marks a significant step toward promoting the ecosystem’s long-term stability and sustainability.
