Terra Luna has been performing exceptionally well today, rising from a low of $84 and peaking at $104. Is this the beginning of a bull market for Terra? Let’s look at what Terra Luna is precisely and why the price is rising so much?
What Is Terra Luna?
The Terra protocol is a leading open-source, decentralized blockchain protocol for algorithmic stablecoins. An algorithmic stablecoin is a cryptocurrency that tracks the price of specific assets, usually traditional currencies like USD, EUR, etc.
Algorithmic stablecoins maintain their price peg through a set of algorithms instead of utilizing an underlying asset. Users can mint the underlying asset by burning Luna.
The Terra protocol creates stablecoins utilizing open market arbitrage incentives and decentralized Oracle voting, which can consistently track the price of any fiat currency.
The network consists of two tokens that power the protocol: Terra and Luna. Terra features stablecoins that track the price of fiat currencies by burning Luna. In addition, the stablecoins are named after Terra counterparts. For example, TerraUSD or UST tracks the price of USD.
Luna is the protocol’s native staking token which rewards users for locking up their assets. In addition, Luna is utilized for governance enabling holders to vote on proposals that shape the project’s future.
As you might have guessed, stablecoins are the main feature of the Terra protocol. You can think of the Terra Luna ecosystem as two separate pools which both expand and contract the price of Terra by incentivizing users to either mint or burn Luna. It’s a novel idea that seems to be catching traction among traders and investors.
Why Is Terra Luna’s price rising?
One apparent reason for Luna’s recent price hike is the growth of its ecosystem. Taking a look at Terra’s leading Decentralized Exchange TerraSwap, we can see that over the past 30 days, the exchange has seen a significant increase in both volume and liquidity.
Over the past 30 days, TerraSwap saw over 1.45 billion in UST traded, with the liquidity peaking at $533 million on March 1st. This signals a continual growth of Terra’s ecosystem which means a higher valuation for the cryptocurrency.
Moreover, looking at the number of wallets for the Terra Station Wallet, we see a linear increase in the number of new wallets, yet another signal that Terra’s ecosystem is growing.
It’s clear that Terra’s ecosystem is snowballing, and the recent all-time high could be a signal that Terra’s Luna is ready for takeoff.
Terra is currently the seventh-largest cryptocurrency by market cap, boasting a $36.3 billion valuation at writing. Luna is on track to surpass XRP, the sixth-largest cryptocurrency with a market cap of $36.5 billion.
Terra’s ecosystem features dozens of dApps, NFTs, Metaverse projects, and more that we highly recommend you check out. Now is a great time to accumulate some underrated Terra-based coins that could see significant price gains if Terra continues its bullish momentum.
Disclosure: This is not trading or investment advice. Always do your research before buying any Metaverse crypto coins.
Also Read:
Top 3 Metaverse Crypto Coins With a Unit Price Below $0.03 (March 2022)
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