Terra chooses Avalanche over Ethereum to back stablecoin reserve

Saif Naqvi
Source: Unsplash

Terra has integrated Avalanche tokens alongside Bitcoin as part of its UST reserve strategy, allying with the popular ‘Ethereum killer’ due to its fast-growing network.

Source: Twitter

Luna Foundation Guard, the company behind the Terra blockchain, will acquire Avalanche tokens worth $100 million from the Avalanche Foundation to boost its stablecoin (UST) reserve. The supplementary purchase will make AVAX only the second digital asset to be added to Terra’s UST reserve after Bitcoin.

Source: Twitter

As part of the alliance between Avalanche and Terra, users would also be able to trade UST for Avalanche tokens directly on Terra’s blockchain. Furthermore, several applications on the Terra blockchain would also launch on Avalanche.

Terra has been on a Bitcoin buying spree after revealing plans to purchase over $10 Billion worth of BTC to back its UST stockpile. After the latest purchase of 2,943 BTC on March 29, Terra currently holds a total of 30727.9 BTC, worth around $1.34 Million based on BTC’s press-time level.

Terra Chooses AVAX over Ethereum

In an interview with Bloomberg News, the co-founder of Terra Do Kwon said that the Luna Foundation Guard handpicked Avalanche because of its ‘rapid growth and vast fan base’. Avalanche was one of the strongest crypto performers in 2021, rising by over 3,300% and offering returns of more than 39 times the investment made.

“Avalanche is still a growing ecosystem…a lot of it is fueled by loyalty to the AVAX token and users feel a lot of affinity with an asset that aligns itself with AVAX,” Kwon told Bloomberg. He also drew comparisons to Ethereum by saying “Whereas for the average Ethereum user, aligning yourself with Ether really doesn’t mean that much.” Notably, Do Kwon recently called out Ethereum in a podcast with Laura Shin recently. He downplayed its significance with respect to Bitcoin, saying that Ethereum doesn’t have the same founding thesis or the Lindy effect as Bitcoin.

At the time of writing, LUNA was trading at $106.89, down by 2.25% over the last 24 hours. Meanwhile, AVAX was the highest gainer among the top 10 tokens, rising by 6.7% to $88.71.