Avalanche Loses $60M in Terra’s Crash, Founder Compares It to Mt Gox Hack

Avalanche founder Emin Gün Sirer

Terra’s crash last week left many investors scratching their heads and counting losses. Other crypto projects and investment firms that partnered with Terra were also affected and are reporting major losses in their LUNA portfolios.

In an interview with Forbes, a

Avalanche Loses $60M in Terra Crash

The Avalanche founder noted that Terraform Labs has proven to be fruitful from its early days up until its recent collapse. During its fruitful period, the Avalanche Foundation, a non-profit organization behind the Avalanche protocol, partnered with Terraform Labs. The partnership was aimed at improving the relationship and interaction between the two blockchains.

As part of the partnership, the Luna Foundation Guard (LFG), a non-profit firm backing the Terra blockchain,  purchased $100 million worth of AVAX to add to its UST reserve.

Sirer mentioned that some amount of AVAX was swapped for Terra’s native coins, UST and LUNA. He further noted that the total investment from Avalanche Foundation amounts to $60 million at the current price of AVAX.

Sirer Not Shaken by $60M Loss

The Avalanche founder said he was not shaken by the $60 million loss made by the TerraUSD (UST) fiasco. The reason for his confidence was the daily trading volume that was achieved by AVAX, which is around $1 billion to $2 billion.

He further mentioned that Terra continues to hold AVAX up until press time:

“We’ve spoken to [Terra] and they did not dump the AVAX even at their hour of need and so it is currently the most valuable thing they hold [. . .] Quite a substantial percentage of the AVAX is actually locked, so they actually can’t move it.”

Sirer then acknowledged that if he were to go back and do things differently, he would still invest in Terra.

“Algorithmic stablecoins have two extremes; they are either pegged or they are deppeged on zero. We knew the risks and we thought, “These guys know how to manage it, their team is operational and capable [. . .] and this partnership could actually yield quite a bit for us.’ And I will do it again,” he said.

Sirer Compares Terra Fiasco to Mt Gox Hack

When asked if the Terra collapse was similar to the infamous 2016 DAO attack, the Ava Labs CEO declined to that similarity, noting that the Terra crash is “much more significant.”

The DAO was the first decentralized autonomous organization (DAO) created on the Ethereum blockchain. The platform got hacked in 2016 and is no longer functional.

Sirer, however, compared the Terra crash to the Mt Gox 2014 hack. Mt Gox was a popular Bitcoin exchange handling around 70% of all BTC transactions globally at that time.  He noted that the similarity between the Mt Gox and Terra incidents is how both events adversely affected the crypto market.

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