LUNA Continues to Shine Despite Crypto Crash
Early December was a brutal period for the crypto market, as it crashed substantially. While it has recovered since, crypto assets like BTC, MANA, SAND and GALA are yet to hit the highs they experienced in November.
Causes include the volatile period for traditional financial markets and skewering inflation.
There is a silver lining though. Terra (LUNA) surged in price and Terra-TVL grew considerably in the past week or so. Why are people choosing Terra stablecoins over other US$-backed assets?
TerraUSD, a truly decentralised stablecoin
TerraUSD (UST) is a decentralised, algorithmic stablecoin that offers a scalable solution for DeFi. Decentralised stablecoin leaders like DAI face severe scalability problems and UST offers a viable solution.
People are finally realizing UST’s potential, which also includes easy exchange, passive income potential and interoperability. The ability to earn income off stablecoin deposits is a key factor currently driving its acceptance. The fact that UST held its peg during the crypto crash is big news and a significant event for the DeFi ecosystem at large.
While stablecoins like USDT, USDC, BUSD and TUSD failed to do so, UST held strong. Earlier this year, it was impossible to think of an algorithmic stablecoin outperforming the above-mentioned stablecoins. More and more exchanges are introducing UST pairs, the latest being KuCoin with SOL/UST and MATIC/UST.
Now, one of LUNA's capabilities is ensuring the price stability of Terra stablecoins.
LUNA burning drove scarcity
From 26th November to 5th December for example, roughly 10 million LUNA tokens were burnt! The reason is simple. As more people are purchasing UST and exchanges are introducing UST pairs, a larger number of UST will have to be minted to meet growing demands.
This in turn leads to LUNA burning, most of which is done by buying LUNA off the open market.
Confirming fundamentals means LUNA should be a key part of your core holdings and at the top of your ‘buy the dip’ coin list. LUNA surged to an ATH recently, so do not rush and buy the coin now.
Author: Surajdeep Singh
Surajdeep Singh is the marketing director at NFT Contemporary and has been working as an IT and blockchain journalist since 2018. He is a contributor to publications including IT Business Edge, Enterprise Networking Planet, eSecurity Planet & Moni Talks and works as a consultant at Drofa Communications Agency.