Luna Foundation Guard's AVAX Token Acquisition

In April 2022, the Luna Foundation Guard, a Singapore-based nonprofit that supported the collapsed Terra ecosystem with its stablecoin UST and token LUNA, purchased $100 million worth of Avalanche's AVAX tokens to bolster its reserves. At the time, UST was the fourth-largest stablecoin.

However, following the collapse of the Terra ecosystem in May 2022, the future of the AVAX tokens held by the Luna Foundation Guard came into question. Recently, the Avalanche Foundation announced a deal to repurchase 1.97 million tokens from Terraform Labs' bankrupt estate.

According to the Avalanche Foundation, this action ensures that LFG would not violate the original agreement's restrictions on the tokens' use and protects the tokens from the complexities of bankruptcy trustee liquidation.

While the financial terms of the deal were not disclosed, the current value of the 1.97 million Avalanche tokens is approximately $56 million, marking a 44% decrease from the original purchase value of $100 million.

The agreement is subject to approval by the bankruptcy court overseeing Terraform Labs' estate. A bankruptcy judge had previously approved Terraform Labs’ wind-down plans in September following a settlement with the SEC.

Since the announcement, the price of Avalanche's token, which had dipped to $25.16 on October 10, has increased over 13% to about $28.50. This rise follows increasing interest in the new video game Off The Grid, which features an in-game economy built on an Avalanche Subnet.