With the recent developments surrounding the Terra, and the proposed Terra chain fork, Avalanche has revealed that LFG, the entity that is behind the reserve fund for the failed UST stablecoin, has not disclosed any plans for the AVAX tokens that it holds in its treasury.
Terra’s Troubles Continue
Terra’s troubles show no sign of abating as of now, as the community continues to debate the way forward. An initial recovery plan that was shared by Terra founder Do Kwon received scant support. However, after consulting with the community and understanding their inputs, the proposal was significantly altered. That proposal has received overwhelming support from the Terra community.
Currently, the LUNA token is trading at $0.000013, while UST is trading at $0.085, a spectacular decline in the value of both tokens after the de-pegging of the UST stablecoin, which rocked the crypto markets.
No Plan Disclosed For AVAX Tokens
In a statement on Twitter, Avalanche, a smart contract blockchain, revealed that up until now, the Luna Foundation Guard, which is behind the reserve fund for the failed UST stablecoin, has not revealed any plans for the AVAX tokens it holds. The Luna Foundation Guard holds around 2 million AVAX tokens in its dwindling treasury. Avalanche stated that it was giving the update because members of the Avalanche community have been enquiring about the AVAX tokens held with LFG.
“Given the proposed Terra chain fork, LFG has disclosed no plans to use the AVAX. Should any sales be contemplated for the LFG reserves, the Avalanche Foundation is ready to work with LFG on a sensible trading strategy.”
A Dwindling Treasury
There is growing speculation about the plans for the AVAX tokens held by LFG and the impact of their sale on the markets. Currently, the AVAX tokens are trading at around $30, which puts the value of the AVAX tokens held by LFG at around $60 million, making it the second-largest holding in the foundation’s treasury.
Demands For Transparency Grow
The Twitter statement by Avalanche comes after projects closely tied to the Terra ecosystem are facing a chorus of demands from their communities for transparency after the events in the market during the previous week. This comes against the backdrop of Avalanche revealing in another tweet that Terra blockchain developer Terraform Labs (TFL) also holds 1.1 million AVAX tokens. The tokens held by Terraform Labs are subject to a one-year lockup period.
“Some members of the Avalanche Community have inquired about details around the $AVAX reserves that the Luna Foundation Guard and Terraform Labs hold. the AVAX is currently immobilized.”
The tokens held by the Luna Foundation Guard and Terraform Labs account for 0.5% and 0.9% of AVAX’s weekly volume.
A Significant Acquisition Of AVAX
Reports had first emerged in April stating that the Luna Foundation Guard and Terraform Labs had acquired $200 million worth of AVAX from the Avalanche Foundation. Avalanche received $100 million worth of LUNA tokens from Terraform Labs and a further $100 million worth of the UST stablecoin from the Luna Foundation Guard in exchange for the purchase.
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