As a seasoned crypto investor with a knack for spotting opportunities amidst market turbulence, I find the Avalanche Foundation’s recent acquisition of 1.97 million AVAX tokens from the now-defunct Luna Foundation Guard (LFG) intriguing. Given the current market conditions, it seems like a shrewd move to buy back these tokens at a discounted price, especially considering that the initial purchase was made at $45.5 million while the current market value is around $53 million.
The Avalanche Foundation recently bought back 1.97 million AVAX tokens that were once owned by the Luna Foundation Guard (LFG). This purchase was made after LFG initially obtained these tokens to bolster the Terra blockchain network.
According to a communication sent to CryptoMoon, the Avalanche Foundation confirmed that they have successfully concluded the token repurchase operation.
In contrast to the statement in Avalanche’s filing suggesting a purchase price of approximately $45.5 million for the tokens, it’s important to note that at the moment of this writing, each Avalanche (AVAX) token was trading around $26.95. This means that the 1.97 million tokens in question would be valued at roughly $53 million according to current market prices.
LFG bought $100 million AVAX in 2022
In 2022, the creator of Terraform Labs, Do Kwon, established the Liquid Fractal Group (LFG) with a goal to safeguard the stability of Terra’s TerraUSD (UST) stablecoin. At that point, the LFG amassed reserves by purchasing Bitcoin (BTC), altcoins like AVAX, and other assets, totaling $100 million in AVAX specifically. The value of UST at that time was approximately $16.7 billion.
Beyond the acquisition of LFG, Terraform Labs exchanged approximately $100 million in Terra (LUNA) tokens for AVAX as a strategic move to coordinate incentives within their respective ecosystems.
Subsequently, Terra experienced a fall, not long after that. By May 2022, UST failed to maintain its dollar parity, causing a steep decline in LUNA’s value and ultimately resulting in the downfall of the entire Terra system.
Avalanche Foundation buys back 1.97 million tokens from LFG
Ever since, I’ve been keeping a close eye on the Avalanche Foundation’s moves. On October 12, they disclosed that they had managed to strike an agreement for token repurchase from LFG. Avalanche clarified that this step was taken to prevent any potential breach of their initial agreements by LFG. They penned down:
“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.”
According to the Avalanche Foundation’s recent announcement, they consider the token buyback as a significant move towards maintaining the stability of the Avalanche ecosystem. Furthermore, they pointed out that the acquired tokens will bolster their endeavors such as providing grants, organizing events, and nurturing incubators.
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2024-11-07 11:36