Avalanche Foundation, the entity dedicated to supporting the growth of the Avalanche ecosystem, is planning to buy back 1.97 million AVAX tokens which was previously sold to Luna Foundation Guard (LFG) in early 2022.
Avalanche is seeking a court approval to remove AVAX tokens from Luna Foundation Guard’s control, thereby protecting the AVAX’s token value.
The Avalanche Foundation has negotiated an agreement to repurchase all AVAX tokens previously sold to the Luna Foundation Guard (LFG) in April 2022, which is now awaiting approval from the Bankruptcy Court.
This action ensures that LFG would not violate the original…
— Avalanche Foundation (@AvalancheFDN) October 11, 2024
Pending court approval, the proposed repurchase aims to prevent the LFG from breaching the original agreement’s terms, the Avalanche Foundation said. The Foundation also wants to protect AVAX tokens from potential risks associated with LFG’s bankruptcy proceedings.
A Valuable Buy?
The Avalanche Foundation believes that the move, once approved, will “further enhances the Foundation’s ability to support the ongoing growth and development of the Avalanche ecosystem.” The exact court hearing date has yet to be revealed.
The LFG is currently in the process of restructuring as part of the broader bankruptcy proceedings of Terraform Labs following the collapse of the Terra ecosystem, which led to ripple effects throughout the cryptocurrency market at the time.
In June this year, Terraform Labs and its founder Do Kwon agreed to pay $4.5 billion to settle with the SEC. The SEC previously accused Kwon and Terraform Labs of selling unregistered securities and defrauding investors.
Terraform Labs plans to shut down several key services by the end of this month unless third-party organizations take over operations. The company said it was negotiating with potential partners but faces a winding down of its operations amid ongoing bankruptcy proceedings.
Facing mounting concerns about its fund management, the LFG recently transferred its digital assets, including Bitcoin and AVAX, among others, to its custody a direct custody solution to enhance security.
These AVAX tokens were purchased from the Avalanche Foundation in April 2022 as part of LFG’s strategy to build reserves for its stablecoin, TerraUSD (UST).
The investment was valued at around $100 million at the time. The Avalanche Foundation’s repurchase plans aim to protect these AVAX tokens from potential liquidation during LFG’s bankruptcy proceedings.
The Drama Rages On
Following the downfall, Terraform Labs proposed a new version of LUNA and abandoned UST. The original network was rebranded as Terra Classic (LUNC), while a new blockchain came as Terra 2.0.
AVAX surged 7%, from around $27.27 to $29.32, following Avalanche Foundation’s announcement, per CoinGecko. It is currently trading at around $29.17, up over 2% in the last 24 hours.
In addition to the repurchasing plan, recent growth of blockchain gaming on the Avalanche ecosystem, is another positive catalyst for price value. Off The Grid, a cyberpunk-themed battle royale game built on an Avalanche Subnet, has gained traction among cryptocurrency members.
The game recently launched in early access on the Epic Games Store and briefly climbed to the first position. Off The Grid features an economy that use NFTs for trading in-game items. Players can find “Hexes,” which are unique items that can be verified and minted as NFTs through nodes that players can own.
Games are a huge market – and a great place for blockchain growth.
The Avalanche Subnet enhances transaction efficiency and scalability within the game’s ecosystem. The integration allows for real-time interactions and trading among players, making it an interesting aspect of gameplay.
Apart from the expanding gaming ecosystem, Avalanche is also trusted by numerous financial giants. The Avalanche network is appealing due to its rapid transaction finality and low fees, making it an attractive option for financial institutions looking to innovate.
Franklin Templeton has recently expanded its tokenized money market fund, FOBXX, to the Avalanche blockchain. The launch is part of the firm’s broader strategy to enhance accessibility and functionality for its financial products.
As of Oct. 13, Franklin’s FOBXX is the second-largest tokenized Treasury fund in the U.S., just behind BlackRock’s BUIDL fund.
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