Terra (LUNA), the native token on the eponymous blockchain, overtook Solana (SOL) on Wednesday to develop into the sixth-largest crypto token by market capitalization. LUNA additionally hit a document excessive as its DeFi adoption soared.
LUNA jumped as a lot as 5%, briefly hitting a document excessive of $119.10, with its market capitalization standing at $41.3 billion. Its most up-to-date spike might be attributed to Binance offering UST staking at an almost 20% yield.
The token is on a tear after hitting its 2022 lows in February. A bulk of its is fuelled by the rising reputation of UST and the recognition of the Terra blockchain as a DeFi platform.
DeFi progress a key think about LUNA rally
Terra’s reputation within the DeFi area is supported by the group’s efforts to keep up liquidity. Terra is at present the second-largest DeFi blockchain by complete worth locked, which stands at $21 billion.
This in flip boosted using LUNA, given that it’s the main medium for transacting on the chain.
Terra’s Anchor Protocol (ANC), the most important protocol on the chain, has additionally surged in reputation by providing the most important yields in DeFi, at practically 20%. Though the platform not too long ago voted to scale back yields, it nonetheless instructions over $16 billion in TVL- the third-highest amongst DeFi platforms.
Moreover, the Terra group repeatedly burns LUNA to mint UST- a transfer that reduces LUNA’s total provide and boosts its value. Based on information from Terra Analytics, practically three million tokens have been burnt prior to now 5 days. This brings LUNA’s complete provide right down to a document low of 351 million tokens.
Terra eyes stablecoin dominance
Terra founder Do Kwon has repeatedly expressed his aim of constructing UST the preferred stablecoin. To this finish, the Terra group has constantly acquired Bitcoin (BTC) to make use of as a reserve for UST- a transfer that has additionally boosted LUNA’s reputation.
The aim is to not develop into the biggest stablecoin on the Terra blockchain, so we broaden to say the Solana, Avalanche, Ethereum, and Polygon ecosystems. We plan to be in all places the place there are builders and customers.
Kwon stated in a latest interview.
UST is the biggest algorithmically-backed stablecoin, which makes use of a mixture of reserves and tokenomics to keep up its greenback peg.
Kwon intends to build up as a lot as $10 billion value of BTC to make use of as reserves. This transfer could be optimistic for LUNA, because it ensures sufficient liquidity on all of Terra’s DeFi protocols.
Thus far, the Terra group has acquired no less than $3 billion value of Bitcoin.