Terra’s UST Becomes First Decentralized Stablecoin To Surpass $10B Market Cap

It’s safe to say that DeFi is booming lately – and Terra’s stablecoin UST has swiftly emerged as a powerhouse player in DeFi, swimming among of sea of centralized tokens such as Tether’s USDT and Circle’s USDC.

DeFi is wholeheartedly embracing UST, and new protocol integrations are popping up faster than most can keep up with, leading UST to surpass decentralized competitor DAI.

Let’s take a look at the recent growth for Terra and UST, and what we can expect from the stablecoin – and the broader Terra Luna ecosystem – looking forward.

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Terra’s On A Tear Lately…

First and foremost, UST has been gaining substantial traction from more casual stablecoin holders who want to maximize their yield potential while balancing platform risk. Terra’s Anchor Protocol has served as a tool that many have turned to in recent months for exactly that; Anchor has offered a consistent ~19.5% continually compounding yield on UST while CeFi platforms like Celsius or BlockFi have been less aggressive in stablecoin rates (Celsius, for example, reduced it’s stablecoin yield rates in December from north of 10% to around 8.5%).

This has opened the door for moderate-risk stablecoin holders to give Anchor a try. Just take a look at the growth in recent months from both depositors and borrowers on the Anchor Protocol platform:

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New Integrations

New platform and protocol integrations have been rolling out at a rapid pace. Our team at NewsBTC covered a deep-dive this week around the NEAR Protocol’s support of UST, and Binance rang in the holiday week last week with new UST support for BTC, USDT, and BUSD trading pairs.

Additionally, UST continues to find new protocol integration across the traditional DeFi landscape: chatter has been abundant around Abracadabra.Money’s new “degenbox,” a yield-generating strategy that allows user’s to leverage their stablecoin UST with Abracadabra’s now infamous Magic Internet Money (MIM).

Of course, we can’t leave out Astroport, a Terra-native Automated Market Maker (AMM) that is in early stages – but has already fielded over $1B worth of capital inflows. These developments have led to Terra’s native platform token, LUNA, to reach record highs. LUNA incurs $1 USD worth of burn with every UST minted, leading it to be an elastic (but lately, deflationary) token.

For more on Astroport and LUNA’s skyrocketing movement lately, check out NewsBTC’s report last week around exactly that. In all, if Q4 2021 is any indication, there’s plenty for LUNA holders, UST yield generators, and Terra Luna watchers alike to be excited about as we head into 2022.

Terra Luna's LUNA token has seen substantial growth in December, in part fueled by greater adoption and integration of the UST token throughout DeFi protocols. | Source: LUNA-USD on TradingView.com

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Featured image from Pexels, Charts from TradingView.com
The writer of this content is not associated or affiliated with any of the parties mentioned in this article. This is not financial advice.


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Terra Climbs to New Highs Becoming the Second Largest DeFi Network

Key Takeaways

  • Terra has become the second-largest DeFi network, overtaking Binance Smart Chain.
  • The network’s native LUNA token has also reached a new all-time high of $84.92.
  • LUNA’s price appreciation, together with new DeFi protocols on Terra have helped the network reach the number two spot.

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Terra has overtaken Binance Smart Chain in total value locked, becoming the second-largest DeFi network behind Ethereum. 

Terra Takes Second Rank

DeFi on Terra is booming.

The network surpassed Binance Smart Chain in total value locked in DeFi protocols over the weekend, as its native LUNA token climbed to new all-time highs.

Currently, Terra hosts over $18 billion worth of assets across its 13 DeFi protocols. A combination of increasing prices and liquidity from new protocols has propelled the total value locked on the network to the number two spot behind Ethereum. 

Since breaking past its prior all-time high at the end of November, Terra’s LUNA token has soared, recovering quickly while the rest of the market dipped. Today, LUNA shot to a new all-time high of $84.92, putting it up more than 85% over the past month. 

LUNA/USD chart. Source: CoinGecko

The diminishing supply of LUNA tokens on the market is likely pushing the price of LUNA higher. For example, the Terra community voted to burn around 10% of the LUNA token supply worth approximately $4 billion in October. 

Additionally, the increasing demand for UST, Terra’s native, algorithmically-pegged stablecoin, also affects LUNA’s price. UST can be minted by burning $1 worth of LUNA in exchange, decreasing the LUNA supply as more stablecoins are produced. 

While LUNA’s price appreciation has helped Terra become the second-largest DeFi network, the launch of new protocols has also attracted more liquidity. Astroport, a new decentralized exchange launching on Terra, has brought more money into the ecosystem with its highly-anticipated “lockdrop.” 

Users who lock up their liquidity in the protocol will receive ASTRO token airdrops depending on the amount of time they lock up their assets for. So far, over $1.1 billion worth of assets have been committed to Astroport in this way, with more than half of that value consisting of LUNA tokens, further reducing the liquid supply on the market. 

While the total value locked on Terra has increased significantly, other Layer 1 chains have lagged. For example, Binance Smart Chain has failed to break past its previous all-time high total value locked of $31.6 billion achieved in May. 

While other Layer 1s such as Avalanche and Solana have experienced steady growth, they have been unable to keep pace with Terra over the past month. 

Disclosure: At the time of writing this feature, the author owned LUNA and several other cryptocurrencies.

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