- Avalanche has repurchased 1.97M AVAX tokens from the defunct Luna Foundation Guard
- The buyback, valued at $53M, strengthens Avalanche’s ecosystem and long-term goals
- AVAX’s price has surged 4.0% in the past week, reflecting strong market confidence
To strengthen its ecosystem, the Avalanche Foundation has successfully repurchased 1.97 million AVAX tokens from the now-defunct Luna Foundation Guard (LFG).
This buyback, valued at approximately $53 million based on current market prices, marks the conclusion of a strategic effort to reclaim tokens originally acquired by LFG in 2022 to support the Terra blockchain ecosystem.
The tokens were initially purchased by LFG for $100 million with the aim of stabilizing Terra’s TerraUSD (UST) stablecoin, which was pegged to the US dollar.
Terraform Labs, the parent company of the Terra blockchain, had established LFG as a reserve to protect UST by accumulating both Bitcoin and other altcoins like AVAX.
However, following the collapse of the Terra ecosystem in May 2022, triggered by UST losing its dollar peg, the value of LUNA plummeted, and the once-promising strategy unravelled.
In the aftermath of this crisis, the Avalanche Foundation moved to negotiate a deal to buy back the 1.97 million AVAX tokens. By doing so, Avalanche ensured that LFG would not violate its original agreement with the Foundation, particularly regarding the use of the tokens.
The buyback also protects the tokens from potential bankruptcy proceedings, safeguarding them from being liquidated in court.
At the time of the repurchase, the AVAX tokens were valued at $26.84 each, pushing the total worth to $53 million, up from the original purchase price of $45.5 million. This action highlights Avalanche’s commitment to the long-term sustainability of its ecosystem.
Repurchased tokens will support Avalanche ecosystem’s initiatives
The reclaimed tokens will be used to support various initiatives within the Avalanche ecosystem, such as grants, events, and incubators.
The strategic buyback represents a crucial step in maintaining the stability of AVAX and bolstering the foundation’s efforts to drive innovation and growth in the blockchain space.
By completing the buyback, Avalanche not only mitigates risks from the Terra collapse, but also reaffirms its position as a leading force in the blockchain industry.
AVAX token on a strong bullish momentum
The token repurchase comes at a time when AVAX is experiencing a surge in value. With a current price of $26.84, AVAX has been steadily gaining momentum, reflecting growing investor confidence and the continued strength of the Avalanche ecosystem.
The token has gained 4.0% over the past week and has seen a remarkable 108.8% increase over the past year.