LUNA Skyrockets 20% Amid Rise in DeFi, Staking on Terra

LUNA, the native token behind fast-growing crypto network Terra, is up over 20% in the past 24 hours. 

The cryptocurrency is currently trading hands at $98.41, a significant feat given that it was trading at roughly $77 on Monday. The current price also puts LUNA within just 5% of its all-time high of $103.34, seen last December. 

Terra is a crypto network built using the Cosmos software development kit (SDK). The project has attracted significant attention of late due to the steady rise of its native U.S dollar-based stablecoin, UST. Terra’s other token, LUNA, serves as a staking and governance token, letting users vote and make proposals about how the protocol should be improved. 

Both tokens are also deeply interconnected too. 

Each time $1 worth of UST is minted, an equivalent amount of LUNA is destroyed. The opposite is also true: In order to create $1 worth of LUNA, users must destroy $1 of UST. This mechanism helps keep UST pegged to the dollar, for whenever it falls below its peg, market participants are incentivized to swap the discounted UST for LUNA. This destroys UST, reduces supply, and, theoretically, pushes the value of UST back to $1. 

So far, it’s working too. 

DeFi and staking on Terra

UST is the crypto market’s largest decentralized stablecoin (meaning it’s not backed by a singular entity nor can its reserves be easily blacklisted or frozen) and the fourth-largest stablecoin overall

The largest stablecoins are Tether (USDT) and USD Coin (USDC), each of which commands a market cap of $80 billion and $52 billion, respectively.

After sheer price performance, LUNA has also just become the most-staked cryptocurrency, overtaking Ethereum and Solana, according to data pulled from Staking Rewards. Staking is the process of temporarily freezing a cryptocurrency by locking it up inside a protocol. 

The reasons for doing so are myriad, but for many investors, the promise of earning a steady reward is perhaps the most enticing. 

Staking on Terra currently earns a little over 6.13%, whereas rewards on Solana and Ethereum and Solana rake in 5.8% and 4.8%, respectively. 

A final bullish stat from Terra revolves around decentralized finance (DeFi) activity. Thanks in part to the rise of LUNA, as well as a whole host of new applications, Terra is now crypto’s second-largest DeFi ecosystem after Ethereum. 

It currently commands over $28 billion and a little more than 11% of the DeFi market share, according to DeFi Llama. Conversely, there is more than $143 billion sloshing around various Ethereum-based DeFi protocols. 

With so many positive metrics on the rise, LUNA’s steep climb in price suggests market participants are now paying very close attention.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

https://decrypt.co/94673/luna-skyrockets-rise-defi-staking-terra

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Source: https://decrypt.co/94673/luna-skyrockets-rise-defi-staking-terra