The project that started as an innovative approach to stablecoins is now an industry powerhouse.
The Blockchain Terra project and its native LUNA token have quickly moved from behind the scenes to the forefront of DeFi. With over $1.9 billion in TVL (Blocked Total Value), is the fifth largest Blockchain project, behind Avalanche.
With several key fundamental developments underway, LUNA saw its price rise by more than 50% last week, with industry insiders believing this is just the beginning of a major bull run that will unfold in the weeks ahead.
What’s behind LUNA’s big rally?
After Bitcoin took a big hit last week, dropping dangerously close to its coveted $50,000 resistance levels, the rest of the market went into the red along with it. However, the biggest drag down doesn’t seem to have affected LUNA, the native token of Terra’s Blockchain.
The Layer-1 Blockchain platform has rocketed from the sides to the forefront of DeFi, riding a wave of extreme interest in its sUST products
innovative tablecoin. Terra allows users to exchange their LUNA tokens for a wide variety of stablecoins linked to different fiat currencies. As the $1 mint of UST requires the burning of $1 of LUNA, an increasing supply of stablecoins on Earth decreases the circulating supply of LUNA, thereby increasing its value.
This simple proposal generated more than 3.2 million registered accounts and 15.3 million UST in tax rewards distributed last year.
Earlier this month, the Terra community approved a proposal to burn 88.7 million LUNA tokens, valued at about $4.5 billion at the time. Burning was initiated to mint between 4 and 5 million terraUSD (UST), a decision that analysts believe would further increase interest in the Earth.
And interest has risen, the token has seen its price increase by more than 50% since last week, mainly fueled by a slew of new ones. proposals set to be approved by the community.
The ultimate goal of all recently submitted proposals is to make UST the benchmark stablecoin intermediary. This process is expected to start by increasing UST’s liquidity in Curve Finance, Ethereum’s flagship AMM for stablecoin swaps, through a 6-month incentive plan through various Terra applications.
All previous LUNA fires have caused a large increase in the annualized staking return for the token, which jumped from 4.61% at the beginning of November to 10.74% at the end of the month.
According to Nicholas Flamel, one of the most prominent members of the Terra community, we are about to see an even bigger increase in the price of LUNA in the coming weeks.
Earth’s economy is booming, I’m pretty confident we haven’t seen anything yet.
Flamel said that both the Terra community and its development team predict the UST will reach $10 billion in market capitalization by the end of the year. And since minting 1 UST requires burning $1 of LUNA, the Terra ecosystem is about to become parabolic.
This means that we will have to buy/burn around $2.5 billion in LUNA in the next 4 weeks. This is big. I’m not sure we’ve seen so much buying pressure in a currency like this before.