The cross-chain integration and growing popularity of Terras Stablecoin UST are just some of the factors behind LUNA’s recent rally to new all-time highs (ATHs).
Stablecoins are an integral part of the centralized cryptocurrency space, and the DeFi ecosystem has evolved over the past few years as they provide the liquidity necessary for merchants to easily switch to tokens. They also act as protection against sharp downside moves like December’s 25% correction.
One project with a stablecoin component where prices have risen to ATH levels despite a stronger downtrend in the market is Terra (LUNA), a multi-sector blockchain protocol that aims to create a global payment system through the use of of Fiat-linked stablecoin TerraUSD (UST).
Data from TradingView shows that LUNA’s price has risen 106% since hitting $ 37.86 on Nov. 26, to a new ATH of $ 78.43 on Dec. 5, while trading volume has dropped to one in its 24 hours Record of $ 5.66 billion.
4-hour frame LUNA / USDT price chart | Source: TradingView
The three reasons for the LUNA price eruption are a growing supply of UST, a number of new cross-chain integrations for the Terra ecosystem, and an increase in Total Value Locked (TVL) on the Terra network.
UST Supply reaches new ATH
One of the main reasons LUNA is strong is the rapid growth of UST’s circulating supply, which is currently the largest algorithm-driven stablecoin on the market and ranks fourth by market cap. The market in this area is $ 8.22 billion.
Proponents of cryptocurrencies who favor decentralized stablecoin options have embraced the use of UST versus its more centralized counterparts USD Coin (USDC), Tether (USDT), and Binance USD (BUSD).
His algorithmically supported stablecoin $ UST has grown to be the largest of its kind and continues to gain Web3 acceptance as THE DeFi dollar
Why that is huge ⬇️ 1 / X pic.twitter.com/LSUEA9HgO6
– Zack Guzmán (🎄, 🎄) (@zGuz) December 2, 2021
“The Terra (LUNA) cryptocurrency project rose 50% last week and hit an all-time high despite Bitcoin falling 5%.
Its algorithm-based stablecoin, UST, became the largest coin of its kind and continues to gain acceptance from Web3 as DeFi dollars. “
As UST has grown in popularity, many in the industry have started calling it “DeFi dollars” as it exhibits decentralization and is slowly spreading across the entire DeFi (multi-chain) chain.
LUNA is also available on several cross-chain bridges, making it easier for LUNA holders to invest in the DeFi ecosystem on Ethereum (ETH), Solana (SOL), Fantom (FTM) and Polygon (MATIC).
The total value locked on Terra reaches ATH
The increased use of LUNA and UST caused TVL on the Terra blockchain to soar to an ATH of $ 14.36 billion on Dec. 5, and the LUNA price hit a record high that same day.
TVL in the Terra network | Source: Defi Lama
TVL’s rapid rise led Terra to become the top 3 blockchain network in terms of TVL after outperforming Solana at $ 12.08 billion while the top 1 Ethereum network had a TVL of $ 164.72 billion and Binance Smart Chain at $ 22.4 billion.
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