These are very exciting times for the cryptocurrency industry. Terra and its LUNA assets have overtaken both Cardano and Solana in market cap earlier today. Moreover, the gap to XRP is not that large, warranting a closer look at what is going on behind the scenes lately.
LUNA Has A Strong Run
Despite the ongoing crypto market volatility throughout 2021, Terra – and LUNA – have noted some solid momentum in the past week. A 68.7% price increase is rather steep, considering how Bitcoin is up by 6.2%, and Ethereum by 63% in the same period. More importantly, assets like XRP, ADA, Dogecoin, and Shiba Inu are all in the red too. Somehow, Terra manages to escape this volatility and march to the beat of its own drum.
More importantly, the ongoing price gain pushes LUNA toward its all-time high again. There is still a 19% deficit to overcome, but Terra’s asset looks far closer to an ATH than most other markets. Achieving a new high will prove difficult, as the market cannot sustain the current momentum forever. For now, though, traders enjoy this momentum while it lasts.
UST Backed By Bitcoin Reserves
This week, the big news is how UST – the native stablecoin of the Terra ecosystem – will be backed by $1 billion in Bitcoin reserves. Bitcoin is considered to be “hard money” and a “modern gold standard”, making it well-suited to serve as a backing for stablecoins. Moreover, one can consider this bullish for both Bitcoin and LUNA, as the entire investment narrative has changed.
An algorithmic stablecoin backed by a volatile cryptocurrency is rather interesting. However, many see the backing by Bitcoin reserves as a step toward reducing volatility for UST, which deviates from its peg regularly (although in small amounts). Moreover, users could swap UST to Bitcoin under favorable conditions.
UST Market Cap Continues Upward Trend
Overall demand for exposure to TerraUSD – or UST – has been apparent for a while now. That trend continued this week, despite a few dips along the way. Currently valued at a market cap of near $13 billion, UST has become one of the top stablecoins in the crypto industry today.
Today, TerraUSD remains the fourth-largest stablecoin by market cap. However, its overall trading volume remains far lower than USDT, USDC, and BUSD, indicating more work to be done on that front. In addition, the asset is listed on just 29 exchanges, another aspect that needs to be improved upon in the future.
Surpassing $20 Billion In DeFi TVL
Another core development is how Terra jumps ranks in the decentralized finance ecosystem. Its Total Value Locked (TVL) has surpassed $21.8 billion, putting it well ahead of BNB Chain ($14.5 billion) and Fantom ($12.21 billion). Moreover, Terra notes a weekly increase by over 39%, primarily thanks to an increasing value of LUNA.
Considering how Terra has 21 DeFi protocols, it seems under-represented in these rankings. All other chains in the top five have at least 174 protocols, making Terra a bit of an outlier. Anchor and Lido remain the prominent platforms for DeFi TVL, although Astroport, Stader, and Nexus Protocol make up ground quickly.
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