Protocol upgrades are one of the biggest drivers of the project as they show the developers dedication, incorporate user requirements, and add new features that make the protocol competitive and advanced.
The project where the value of the token rose to an all-time high (ATH) after an upgrade was introduced is Terra (LUNA), a blockchain protocol that uses fiat-backed stablecoins like TerrUSD (UST) to create a global payment system.
Data from TradingView shows that after reaching $ 23.81 on September 21, the price of LUNA rose 108% to establish a new ATH of $ 49.55 on October 4th as the trading volume for Shot to $ 2.5 billion in 24 hours.
LUNA / USDT 1-day chart | Source: TradingView
The three reasons for the price breakdown at LUNA are the introduction of the Columbus 5 upgrade to introduce the LUNA burning mechanism, the adoption of the protocol standard for inter-blockchain communication (IBC), the opening of Terra to the ecosystem and the spread of DeFi -Applications as well as the Total Value Locked (TVL) on the log.
Columbus-5 launches on September 30th. According to Terra developers and independent analysts, this is the most significant development for the protocol to date.
1 / Columbus-5 is now officially live as the new Terra Mainnet!
Welcome to the future of Terrahttps://t.co/EFnQnFr2lB
– Terra (UST) Powered by LUNA (@terra_money) September 30, 2021
“Columbus-5 is now officially live as Terras new mainnet!
Welcome to the future of Terra. “
One of the notable changes that came with the upgrade was a modification of the project’s tokenomic model that resulted in the entire LUNA used to mint UST being burned instead of being carried over to the communal pool.
follow data From Terra, $ 832 million LUNA was burned in the Genesis block of Columbus-5.
This shift has created deflationary pressures on LUNA supply and could increase prices in the long term if demand for USTs increases.
The second reason LUNA is growing is its integration with IBC, which enables the Terra network to communicate and interact with protocols in the Cosmos ecosystem.
This integration opens up a wider acceptance for Terra and Stablecoin UST across the Cosmos ecosystem, making it the stablecoin of choice for applications and chains in the network.
With a larger pool of projects currently having access to UST, this could lead to further deflation of LUNA supply as more burns are required during the minting of new USTs.
TVL in the Terra ecosystem is increasing
The third reason for the upward movement at LUNA is the growing ecosystem of DeFi protocols on the network that helped bring TVL to the new ATH.
According to data from Defi Llama, TVL hit a record $ 10.07 billion on the Terra network on October 4 when the LUNA price erupted sharply and hit a new ATH.
TVL on Terra | Source: Defi Lama
Currently, Terra’s TVL is over $ 10 billion, and the top rated platform for TVL on the protocol is the Ancor Protocol (ANC) at $ 3.86 billion. The Anchor Lending Market is the most important way to mint UST by collateralizing LUNA or Ether.
Other notable DeFi protocols on the network are Lido (LDO) with a TVL of $ 3 billion, Mirror (MIR) with a TVL of $ 1.38 billion, and Terraswap with a TVL of $ 1.32 billion .
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According to Cointelegraph