Avalanche team clarifies the volume of Terra-linked AVAX reserves

Avalanche Foundation disclosed the size of Terra’s reserve holdings in AVAX tokens to dispel community fears of a sell-off.

1/ Some members of the Avalanche Community have inquired about details around the $AVAX reserves that the Luna Foundation Guard and Terraform Labs hold.

Tl;dr: the AVAX is currently immobilized. Below is a transparency report 👇

— Avalanche 🔺 (@avalancheavax) May 19, 2022

Some members of the Avalanche community asked for details about the AVAX reserves held by Luna Foundation Guard (LFG) and Terraform Labs (TFL). In short: they are currently not in circulation, the tweet said.

In a thread, the non-profit behind the Avalanche ecosystem said that:

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

The Avalanche Foundation noted that “given the proposed hard fork of Terra, LFG did not disclose plans for using AVAX.”

The team added:

If any sales of reserves are contemplated, we are ready to work with LFG on a sensible trading strategy.

4/ Should any sales be contemplated for the LFG reserves, the Avalanche Foundation is ready to work with LFG on a sensible trading strategy.

— Avalanche 🔺 (@avalancheavax) May 19, 2022

On May 16, LFG reported the state of the reserve fund, whose crypto-asset value at its peak exceeded $3 billion. In an attempt to maintain the peg of the algorithmic stablecoin UST to the dollar, the organisation spent its reserves in USDT and USDC.

Of the 80,394 BTC on the balance sheet, 313 BTC remained. However, assets in BNB and AVAX remained untouched. Excluding UST and Terra’s native token LUNA, the fund’s value fell to about $87 million.

Co-founder Do Kwon proposed to carry out a Terra hard fork with a new network and an airdrop. He described it as ‘a chance to resurrect the project from the ashes’. Although the community reacted negatively, validators voted for its implementation.

Earlier, Binance CEO Changpeng Zhao said that the hard fork will not work, because the new network would have no value.

The founder of Galaxy Digital, Mike Novogratz called UST ‘a big idea that failed’.

According to Tether’s CTO Paolo Ardoino, Terra’s stablecoin proved to be ‘a badly designed product’.