The native token of the Terra protocol, LUNA, traded above $78 on Binance, reaching a peak as funds flowed into the project’s ecosystem — total value locked in DeFi apps exceeded $14 billion.
At the time of writing, LUNA was trading around $77.
The rally propelled LUNA into the top ten digital assets. In the last 24 hours the token’s price rose by almost 36%, and its market capitalization reached $29.65 billion.
Terra is a blockchain protocol for issuing algorithmic stablecoins. The project was founded in 2018 by Daniel Shin, the president and founder of Ticket Monster. The latter is one of the leading e-commerce companies in South Korea.
The project supports stablecoins pegged to the US dollar, the South Korean won, the Mongolian tögrög, and SDR. The LUNA token is used for governance and to stabilise the prices of assets issued on the network.
The largest algorithmic stablecoin in Terra is TerraUSD (UST), pegged to the US dollar. According to CoinGecko, at the time of writing the asset’s market capitalization exceeds $8 billion — over the past 30 days the figure has risen 181%.
The project team also actively develops the DeFi segment of the ecosystem. Leading protocols on Terra are Anchor and Lido. The former allows using bonded assets (bonded assets) to collateralise borrowing of stablecoins issued on the Terra network. The latter offers the ability to unlock staking-allocated coins like SOL, ETH and LUNO for further use.
Over the last seven days, Terra’s TVL rose 45%, reaching $14.16 billion. This has placed the blockchain protocol third among the largest ecosystems by TVL, ahead of Solana ($12.81 billion) and Avalanche ($12.49 billion), but behind Binance Smart Chain ($17.12 billion) and Ethereum ($166.38 billion).
The growth of the project was aided by the integration of the Inter-Blockchain Communication Protocol (IBC) from Cosmos in late October 2021. The solution enables messages to be transmitted between different blockchains. Consequently, the UST stablecoin and the LUNA token appeared on the Cosmos network.
1/ Proposal 128 to initiate IBC on Terra has passed, meaning that IBC is now live on the Terra mainnet 🙂https://t.co/4aIjkdDBBH
Stay tuned for once the relayer channels are set up, and users can begin transferring tokens between Terra and the Cosmos ecosystem from Station.
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) October 21, 2021
Another important factor was the activation of the Columbus-5 upgrade, which includes a deflationary pressure model on LUNA. Previously, governance tokens used for issuing stablecoins were moved to the community pool. After the hard fork, the algorithm began burning them.
In November, the Terra community also decided to burn 89 million LUNA (about $4.5 billion at the time) held in its pool.
1/ The on-chain votes for proposals 133 and 134 to burn the 88.675 million Pre-Col-5 $LUNA in the Community Pool (~$4.5 billion), swapping for $UST using the on-chain swap, and reducing the oracle_rewards_pool distribution window from 3 to 2 years have now passed!
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) November 10, 2021
In July, the Terra-backed Terraform Labs attracted $150 million for an investment fund, aimed at developing the blockchain ecosystem.
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