thecoinrepublic.com
- Terra Ecosystem growth draws new participants
- Anchor to link Ether as collateral
- Terra Ecosystem enables access to major sectors in the cryptocurrency segment.
As Bitcoin and other high brow cryptocurrencies are going through a bearish phase, altcoins like UST and LUNA have gained 162% in the past two weeks.
Bitcoin prices have once again tanked after a rally that moved the value of the number one cryptocoin to $42,000 last week. The crypto coin is struggling to hold above $38,000. However, altcoins with solid fundamentals and real-world applications are gaining momentum.
Since the start of August, Terra (LUNA), a blockchain protocol that backs the fiat-pegged TerraUSD (UST) stable coin, is a project which has not looked back. On the contrary, it has surged against the tide sweeping the cryptocurrency sector and is climbing higher.
Data from TradingView reveals that LUNA has recovered 162% from a low at $5.53 on July 20 to an intraday high at $14.51 on Aug. 3 as its 24-hour trading volume increased from $137 million to $774 million.
The surge in LUNA’s price is based upon solid fundamentals. The amalgamation of a wrapped Ether (ETH) form to Anchor protocol enables moving Ether staking rewards to the Terra ecosystem. In addition, the protocol’s tokenomics help control the circulating supply of LUNA and UST, which have helped the surge in LUNA’s price.
New projects launching on the Terra blockchain
Terra ecosystem adoption is surging, which can be gauged by the rapidly expanding list of partners and projects launching on the Terra blockchain.
The ecosystem enables access to some of the most happening sectors in the cryptocurrency segment. It includes decentralized finance (DeFi) and non fungible tokens (NFT) and bridges to other blockchain networks such as Ethereum and Solana. The Blockchain is compatible with numerous retail and payment protocols. It also enables token holders to use LUNA and UST for everyday purchases.
Currently, Terra offers stablecoin support for 17 fiat currencies. It includes U.S. Dollar, Euro, and Canadian Dollar. There are plans to expand the ecosystem to include even more fiat currencies in future.
Anchor protocol votes to link Ether as collateral
One more reason for the surge in Luna prices is the ongoing vote on the Anchor protocol to add wrapped Ether to the platform to mint UST. The amalgamation has been made possible through a partnership with Lido, a staking protocol for Ethereum and Terra, enabling stakers to receive liquid stETH (staked Ethereum) and bLUNA (bonded LUNA) tokens. If approved, Ether will become the first collateral option to staking rewards from outside the Terra ecosystem. As a result, it will surge the value of the protocol to new heights.
LUNA burns as traders arbitrage UST
The third big reason for the surge in LUNA values is linked to the protocol’s tokenomics and the utilization of LUNA to mint UST. For minting a new UST, an equal amount of LUNA must be burned. Therefore, it affects the supply and value of LUNA.
As powerful platforms like Mirror Protocol grow and require more UST to bootstrap the platform, and new protocols are linked to the Terra platform, the increased demand will lead to a surge in the prices of LUNA and UST.
Increased demands of UST often push its price above $1 and give arbitrage opportunities for token holders. For example, they can buy $1 of LUNA on exchange and burn it via Terra Station for 1 UST even though the price of UST may currently be $1.10.It is how new UST enters the market, and the platform ensures that the price remains pegged at $1.
The above tweet reveals that as new UST are mined reciprocally, LUNA’s circulating supply has decreased, positively affecting LUNA price. In addition, the link-up with Ether as a collateral option, new stablecoin offerings and new protocols launching on the platform have all helped to surge the values of LUNA.