Avalanche founder reveals losses from Terra investment

The Terra ecosystem collapse cost the Avalanche Foundation, a nonprofit organization, about $60 million, according to Emin Gün Sirer, founder of Avalanche and head of Ava Labs, in an interview with Forbes.

According to Sirer, the Avalanche Foundation worked closely with Terraform Labs. He explained that the partnership between the two companies was aimed at increasing interoperability between the two blockchains.

As part of the collaboration between Luna Foundation Guard (LFG) and Terraform Labs (TFL) invested in AVAX. The former acquired tokens in an over-the-counter deal for UST, while the latter swapped them for the cryptocurrency LUNA. The assets were intended to be used to stabilise the TerraUSD price.

The head of Ava Labs noted that the Avalanche Foundation also invested about $60 million in the Terra ecosystem at the current AVAX price. 

Sirer also said that TFL and LFG continue to hold AVAX:

«We spoke to them; they did not dump AVAX even in difficult moments, so at present this is the most valuable asset they own. […] A significant portion of the tokens is effectively locked, so they cannot move them».

Earlier, at Avalanche Foundation they clarified the amount of Terra-owned AVAX tokens:

• TFL bought 1.09 million AVAX with a one-year lock-up period;
• LFG bought 1.97 million AVAX for use in a reserve fund;
• these amounts represent 0.5% and 0.9% of weekly trading volume, respectively.

The founder of Avalanche stressed that he does not regret investing in Terra. In his view, the partnership with the project could have brought Ava Labs substantial profits.

«We knew there were risks and thought: “These guys understand how to run the project; their team is efficient and talented”», he explained.

Sirer believes that Terra’s collapse has more serious consequences for the cryptocurrency industry than the The DAO attack. He compared the incident to the Mt. Gox exchange hack in 2014. The Avalanche founder explained that the similarity lies in the negative impact of these events on the sector. 

Forbes described the collapse of LUNA and UST as the «fifth reboot» of the crypto market.

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